Frank Ferguson had a knack for building companies. He headed Bose at a time of rapid growth and built Curriculum Associates into a great success. Frank Ferguson’s angel investing was unusual in that he invested in just a few startups but lavished support on those few. The results were great. Frank was active well into his nineties but passed away recently; this relaunch of an interview I recorded with him is a memorial for his life of achievement and passion. It’s loaded with lessons for angels and founders. Rest in peace, Frank Ferguson.
My favorite observation from the conversation with Frank Fergusson neatly encapsulates his recipe for success as an investor:
“You can get sucked in and fall in love with a lot of things, but then you have to ask, "Are these the guys who can actually make it happen?” What are the odds that these guys can keep together, not fight, get over it, be successful, run things correctly, not fall in love with their own things so much that they lose track of the financial realities of the business? Can they sell?”
Click Here to read the episode transcript.
Topics discussed include:
Yes, That Bose Corporation!
Curriculum Associates, Which Frank Ferguson Built, Continues to Be Hugely Successful
Scraping Chicken Droppings in an Iowa Farm
From Iowa State University to Teheran Courtesy of Syracuse University & the US State Department
Frank Ferguson Thinks about Business School at MIT or Harvard Thanks to a Friendly Psychologist
With an MIT Sloan MBA in Hand, Frank Ferguson Goes to Work at Baird Atomic Near Harvard Square
Frank Ferguson Meets his Co-founders at Curriculum Associates Just as He Starts Work at the Bose Corporation
Frank Ferguson Invests $80,000 in Today’s Dollars in Curriculum Associates Circa 1959 - Money Saved through Frugal Living in Iran
How Frank Ferguson Connected with Amar Bose, Founder of the Bose Corporation
Frank Ferguson Invests in the Bose Corporation
Amar Bose Invites Frank Ferguson to Be President of the Bose Corporation in 1969
Frank Ferguson Moonlighted at Curriculum Associates while Running the Bose Corporation
Frank Ferguson Left the Bose Corporation When it Was Experiencing Growth of 70% per Year to Get Curriculum Associates off the Ground
Amar Bose, Brilliant but Difficult at Times
Frank Ferguson Succeeds in Educational Publishing, a Notoriously Tough Business, by Finding a Niche – Differentiated Instruction
Curriculum Associates Succeeds but Discord Arises Over the Purchase of a Water Cooler!
Competition Gets Rough in the World of Educational Publishing
Curriculum Associates’ i-Ready Succeeds by Measuring Progress of Individual Student to Help
Teachers Better Support Students – Teacher Training a Pivotal Element of i-Ready’s Success
Before Teacher Training Was Required i-Ready Saw No Gains – With Teacher Training Student Gains Are Dramatic!
Ugly Truth – Fifth-grade Teacher Has Three to Five Year Grade Span in Her Classroom
Lev Vygotsky, Seneca The Younger & Andrew Bell of Madras College – “By Teaching We Learn”
“Talk to Me Baby – How You Can Support Young Children’s Language Development” by Betty Bardige
Visionary Entrepreneurs Need to Hire Grunts Who Are Really Good at Execution – Frank Ferguson Was the Grunt & Amar Bose Was the Visionary
How Amar Bose Hired the Smartest of the Smartest for the Bose Corporation
Family with 11 Children Uses the Madras Method Whereby the Elder Learn by Teaching the Younger
Sign Up at AngelInvestBoston.com to Hear About Upcoming Free, In-person Events – do Review Us on iTunes
Frank Ferguson, Practical & Involved Philanthropist – Lionheart Foundation – Robin Casarjian
Frank Ferguson Does Nothing in Half Measures – Elon Musk Would Approve
Frank Ferguson - Angel Investor in the Bose Corporation and Curriculum Associates – Participated in the Baird Atomic IPO
Hugh Stoddard, Father & Son, Piali De & Senscio Systems
Amos Tversky & Daniel Kahneman, “Thinking Fast & Slow”, “Nudge” by Cass Sunstein and Richard Thaler
Frank Ferguson Connects with Will Graylin, Invests in Loop Pay Now Samsung Pay
Will Graylin and ONvocal
Frank Ferguson’s Approach to Angel Investing – Invests Where He Finds the People and Technologies Compelling – Few Enough Companies So He Can Make a Real Difference
People Come up with Great Ideas, Great Markets but Sometimes Forget that there Is Friction in the World
Lessons from Iran for Angel Investors
Transcript of, "Practical Dreamer"
Guest: Executive, Founder, Publisher & Angel Frank Ferguson
Sal Daher: Frank Ferguson took an approach to angel investing that was unusual…but highly successful. He invested in relatively few startups and poured a tremendous amount of energy into those few startups, and had just an amazing hit rate. This is the story of a kid who grew up poor in a Depression-era Iowa farm; scraping chicken droppings. Eventually he became a videographer in Iran…went on to run one of America’s iconic companies; built another really important company…and helped several really important angel investments along the way, and was a friend, and a mentor, and a support to so many people. This is a very big-hearted individual who succeeded. He was hard-headed but he was also a tremendous…fantastic dreamer, and a very decent person to his friends, his family and to all the startups he worked with. This is really a memorial to Frank Ferguson who passed away recently but I had the privilege of recording an interview him which I wish had been twice as long because he had just so many interesting things to say. There’s a lot to learn from Frank Ferguson, so I highly recommend this interview. He is a very respected angel in Boston; just Google “Iowa State Frank Ferguson”. Rest in peace, Frank Ferguson.
Sal Daher: Welcome to Angel Invest Boston, conversations with Boston's most interesting angels and founders. I am Sal Daher and my goal for this podcast is to learn more about building successful new companies. The best way I can think of doing this is by talking to people who have done it. We will be speaking with executive, entrepreneur, publisher, philanthropist and angel investor Frank Ferguson. Frank, I am most gratified you could be here to talk with us.
Frank Ferguson: Thank you, Sal.
Yes, That Bose Corporation!
Sal Daher: Welcome. Now, I'm going to read an introduction to Frank Ferguson and it's going to be a little bit long because he is, as I said, has had a remarkable life. Frank graduated from Iowa State University in 1950 with a degree in Journalism and minors in Education and Psychology. He received an MBA from MIT 1959. Frank served as President and CEO of the Bose Corporation from 1969 to 1976. Yes, that Bose Corporation!
Curriculum Associates, Which Frank Ferguson Built, Continues to Be Hugely Successful
…[during] a period of rapid growth for this one-of-a-kind technology company. Frank then became one of five co-founders of Curriculum Associates, and there's a tale there to be told that Frank will tell later on, a provider of educational curricula to schools across the country. CA as the firm is known prides itself in creating instructional material guided by sound research rather than by mere commercial interest.
Despite these convictions which can be seen as obstacles to success, CA continues to grow and remains a successful, independent company. Frank served as President of Curriculum Associates from 1976 through 2008 and since then as its Chairman.
Frank's work as a philanthropist is highly involved. In addition to generous monetary gifts Frank provides his expertise and energy to help organizations he supports achieve their objectives.
He's a member of the Boston chapter of Social Venture Partners, a nonprofit that mentors and financially supports organizations with social missions. Since 2010 Frank has been a board advisor of the Lionheart Foundation. He has been profoundly influenced by the work of Dr. Martin EP Seligman and especially by the implications of instruction and learning arising from the connection of oral language to cognition set forth in Lev Vygotsky's seminal work, Thought and Language.
Frank was recently honored with an Association of American Publishers Hall of Fame Award for lifetime achievement and contributions to the education industry. Frank is also a very hands-on angel investor and a member of Walnut Venture Associates in which capacity I had the good fortune to get to know him. After all this it's really a very impressive curriculum vitae that you have.
Frank, I think it's very valuable for young people to understand how people find their way in life. As you say you're still finding your way in life after all this achievement, but tell us how you got started from college to finding your way to all the wonderful things you've achieved.
Scraping Chicken Droppings in an Iowa Farm
Frank Ferguson: Well, I was born in Ames, Iowa. My parents both had been farm families and we lived on five acres on the edge of town. One morning after having scraped chicken roosts all morning I asked my mother why can't my dad collect stamps instead of having chickens for a hobby? Of course I didn't understand this was the 1930s and it had something to do with our eating regularly during the Depression.
Sal Daher: Oh my goodness.
From Iowa State University to Teheran Courtesy of Syracuse University & the US State Department
Frank Ferguson: I had numerous jobs running from delivering The Morning Des Moines Register newspapers to all kinds of low paying jobs in the farm fields, ended up going off to war as my kids said, "Dad, you got late for the war." In 1945 by the time I got off the boat in the Philippines before I finished. I had a couple of years in the military. Came back to Ames, Iowa and not having heard of MIT and Harvard, it never occurred to me that I should even think about applying there.
I applied to the Iowa State University of Science and Technology, which institution is today the Iowa State University. Then it was agriculture and mechanic arts, one of the moral colleges of which there were many in the Midwest in those years. I went through the school and when I got out I had an opportunity to learn film making. The journalism program provided a photography option and that got me into that. I worked for several years for Syracuse University in the Foreign Aid program, first in Istanbul and then for several years in Tehran.
Sal Daher: The Foreign Aid Program with funds provided by the US State Department or US AID...
Frank Ferguson: Yes.
Sal Daher: ... to Syracuse University.
Frank Ferguson: Exactly.
Sal Daher: To help overseas.
Frank Ferguson Thinks about Business School at MIT or Harvard Thanks to a Friendly Psychologist
Frank Ferguson: Right. I lived in the outskirts of Tehran during the period I was working in the Foreign Aid Program and my neighbor was sort of a psychologist I guess who was also involved in the Foreign Aid Program. I after several years there decided that I probably would want to go back to school. We had two children at that point. I had come home and married a lovely lady that I had met in school. He said, "So what do you want to do?" I said, "Well, I don't really know."
He said, "What are you doing now?" I said, "Well, actually I've ended up being the manager in Tehran. The man who had been boss had moved off to another opportunity that Syracuse had in Korea and he left me in charge in Iran. He said, "So what are you doing?" I said, "Well, a lot of contract stuff." He said, "Why don't you think about going to business school?" I said, "Business school? That's an interesting thought."
He said, "Well look, I used to for many years I was in Boston and there was a great one at Harvard and there's another one at MIT." I applied to both schools and somewhat to my astonishment was accepted in both. Then I had to decide whether I was going to MIT or Harvard. Harvard seemed to have all these courses in finance and merchandising and retailing, but MIT had all this really cool technology stuff.
That was kind of a lean towards MIT, but then I looked into the housing situation and with coming there with two small children housing was going to be a problem. I found out that MIT offered graduate student housing, but Harvard Business School at that stage did not. That was it, we picked MIT and 18 months later I had a job offer for a company in Harvard Square. Took it and then I ...
Sal Daher: This is after you finished your MBA at Sloan.
Frank Ferguson: Right. Yeah.
With an MIT Sloan MBA in Hand, Frank Ferguson Goes to Work at Baird Atomic Near Harvard Square
Sal Daher: Okay. What company was that?
Frank Ferguson: That was a company called Baird Atomic.
Frank Ferguson Meets his Co-founders at Curriculum Associates Just as He Starts Work at the Bose Corporation
Frank Ferguson: Then I got involved with some people that were interested in education and they were forming Curriculum Associates. There was a guy named Chris Simms who was kind of a business man. He had been part of Raytheon and he left and he had wondered into the Curriculum Center of Wellesley and met an educator who was the curriculum director for Wellesley. A guy named George Moore and an elementary principal, Will Woodruff.
Both of them had been graduate students at Boston University under a guy named Donald D. Durrell who actually grew up in Ames about a half a mile from my home 40 years ahead of me. He and I didn't connect at that point. Moore says we're going to start this publishing company. Want you to get involved. I said, "I really can't do that." He said, "Why not?" I said, "Well, I'm going to be leaving here on Monday to take a job at Bose Corporation. Bose has hired me to be the President and I'm going to have my hands full." He said, "Well, if you can't get involved could you loan us some money?"
Sal Daher: You really got involved!
Frank Ferguson Invests $80,000 in Today’s Dollars in Curriculum Associates Circa 1959 - Money Saved through Frugal Living in Iran
Frank Ferguson: I said, "Who is this guy Chris Simms?" He said, "Well, you should meet him." We did and he puffed on his pipe and we sipped sherry and he told me this amazing thing that he was going to do. I said, "Okay, I'll join in." I put in, my wife and I decided to put in some money, 10,000 I think and then I went off to Bose and had a long career there.
Sal Daher: This was at what time?
Frank Ferguson: This was 1969, yeah.
Sal Daher: '59. Ten thousand dollars would be today more like 90,000, maybe $80,000, something like that [about $82,000 according to an online inflation calculator].
Frank Ferguson: Yes. More just what the escalation is.
Sal Daher: It was a very significant amount of money.
Frank Ferguson: It was a significant amount and I'd saved a lot of money during the years I was in Iran. We lived very frugally and I wasn't paid a lot. I think about seven or eight thousanf a year or something like that, but we saved significant amounts of it because we, living in Iran was not expensive. Even though we had a servant that we called Marilyn Monroe because she kind of swished around the house carrying one of our infants, that's how all that got started.
How Frank Ferguson Connected with Amar Bose, Founder of the Bose Corporation
Sal Daher: How did you connect with Amar Bose?
Frank Ferguson: Well, that's again, serendipity. I was living in Lexington across the street from a guy named Ken Jordan who had been at MIT.
Sal Daher: One second if I could interrupt. Amar Bose was a professor or is that probably going to be ...
Frank Ferguson: Yes. Well, yes. He was Indian but had grown up in Philadelphia area. Come to MIT as a student and ended up on the faculty and then ended up starting the company. He was a very close friend of my across the street neighbor Ken Jordan. One night they came out, he, Amar and a couple of these people and delivered one of their loud speakers, the speaker the preceded the one that made him famous which was the 901, the little pentagonal speaker. There was a speaker ahead of that called the 2201 which was in the shape of a quarter of a sphere, cut an orange in half and then cut the halves in quarters and you've got an eight of a sphere.
Sal Daher: Wow. I've seen images of that. Yeah.
Frank Ferguson: Yeah. It fits in the corner of a room. The 90 degree angles opposite the curves of the surface sit in the corner of a room. You have two of those in two corners of the room, you've got a stereo system. Ken didn't have enough money to buy two so they were delivering one.
Sal Daher: They were expensive.
Frank Ferguson Invests in the Bose Corporation
Frank Ferguson: That's when I met Amar. That night we just said hello as they were setting this thing up and getting it going. Then a couple of years later Ken said, "You know, Amar's raising money and I'm thinking of investing. What do you think?" I said, "Well, I really don't know." He said, "Well, I think he's one of the brightest guys I ever knew. I think I'm going to put some money in. Are you interested?" I said, "Well, I have no idea. Maybe I should be." He said, "Why don't you go out and meet him?"
I went out to Natick where they then were and he explained they had this new shape of speaker that was a pentagonally shaped 901, had eight loud speakers on the two sloping rear surfaces and one speaker on the front side and a pair of them of course would make a stereo system. He said, "This things sounds better than speakers that cost 10 times as much." At that point the pair sold for I think $476 or something like that. It was not very expensive. Well, maybe because there were speaker systems that were several thousand dollars.
Sal Daher: They had a capacity, they could really fill a very large space.
Frank Ferguson: Absolutely.
Sal Daher: They were very small.
Amar Bose Invites Frank Ferguson to Be President of the Bose Corporation in 1969
Frank Ferguson: Absolutely, and you could put 200 watt amplifiers on them and sort of raise the roof with them almost. I went out to meet him and decided to invest. A couple years later he called me out and he said, "I need you to come and take over the company. I'm still very busy at MIT and I just need somebody." I said, "Amar, I'm not an engineer." He said, "I'll worry about the engineering, you worry about the rest of it."
Frank Ferguson Moonlighted at Curriculum Associates while Running the Bose Corporation
I became the third President of Bose Corporation. There have been five or six since then and Amar has now passed away. It's in the hands of his successors and doing very well. I have no idea what their sales are now, several billion dollars a year I guess and tens of thousands of employees probably. I just don't know. I've lost track. I had a long run there and at the same time that I was going to Bose I was involved getting Curriculum Associates started with this guy named Chris Simms who was getting it underway.
He turned out to be not the right person. Within a year he left. Then the other businessman involved, Andy McAllister took it over. Then a few months later he had a big fight with the educator, one of the educators over whether the educator could have a water cooler and McAllister said, "We can't afford one." The educator said, "I'm not going to come in here and help you if I don't get a water cooler."
Andy said, "Okay, that's it. I'm out of here, so I took over Andy's position. Simms had left, Andy had left. That left me and the two educators and we staggered along and grew little by little, every year a little more. Finally I left there to go to Bose Corporation and was there for several years and then came back.
Sal Daher: You were with Curriculum Associates for a little while at its inception.
Frank Ferguson: Well, yeah.
Sal Daher: Then you went to Bose.
Frank Ferguson: Well, I was at Bose. This drama was taking place at Curriculum and I ended up being the President. At 7:30 in the morning I'd go into Curriculum and by 8:30 I'd be at Bose. I was wearing two hats at once.
Sal Daher: Oh my goodness.
Frank Ferguson: At one time. Finally it got to the point, Curriculum Associates got to the point that somebody had to be in there full-time so I said, "Amar, would it be okay if I left?" He said, "Well, we'll manage." He did. He's had numerous people running the company ever since. Curriculum then was really what we call a supplemental publisher.
Frank Ferguson Left the Bose Corporation When it Was Experiencing Growth of 70% per Year to Get Curriculum Associates off the Ground
Sal Daher: You were President and Chief Operating Officer of Bose Corporation which at the time was experiencing unbelievably fast growth.
Frank Ferguson: Five years of 70% per year growth.
Sal Daher: Seventy percent growth.
Frank Ferguson: With no external money.
Sal Daher: No external money.
Frank Ferguson: All raised by internal cash generation.
Sal Daher: Because of its products they were just lapping the markets.
Frank Ferguson: This was the Hi-Fi era and this strange looking loud speaker sounded better than speakers that cost five or 10 times as much money. Great big huge consoles and the little 901s just sounded a lot better.
Sal Daher: That was a phenomenal risk for you to take because you were really passing up something really, very, extremely valuable leaving being the president of in effect the CEO because Amar continued to be a professor at MIT. Amar Bose ...
Amar Bose, Brilliant but Difficult at Times
Frank Ferguson: He was also helping me at my elbows. Amar was a spectacularly talented brilliant, brilliant person but he was also rather difficult. There was a famous Christmas party at which everybody was having a good time and he raised his hand, silenced the room and then gave about a 10, 15 minute diatribe about how everybody had to really buckle down because we were really needing to ramp the company up. This was at the Christmas party. He went on and on and on and on.
People just rolled their eyes. Anyway, he was one of a kind, no question about it and difficult enough to work with that the opportunity, when Curriculum Associates got up to about eight people and was growing nicely somebody had to be in there full-time so I left Bose and came in full-time. Then in 2010 I hired a CEO to take it over. I'm now Chairman of the Board. He reports to me and everybody else reports to him. He's grown the company tremendously. We're over 600 people now. That's an interesting story in itself.
Frank Ferguson Succeeds in Educational Publishing, a Notoriously Tough Business, by Finding a Niche – Differentiated Instruction
Sal Daher: Yeah. Well, tell us the story and also the work that Curriculum Associates does because it's a notoriously difficult space to be in, to grow. Educational publishing is dominated by large, well-entrenched players. It's difficult to market to school districts across the country that have a very long product [sales] cycle and so forth. How did Curriculum Associates succeed in this extremely adverse environment?
Frank Ferguson: Well, the short version of the story is that the company from day one had good product. They had two educational founders. There were the three businessmen who were founders and the two educators. The two educators were the principal and the curriculum director at Wellesley. Both of them had studied at Boston University under a man named Donald Durrell.
Durrell had been focused very much on individualized or as he would call it, differentiated instruction and finding ways to customize what a teacher could do for students on an individual basis. Find out what the student's needs were and then customize what the student got. In those years it was about using three or four grade levels of books in the classroom. If a student was at fifth grade level but needed second grade math you had a second grade book for him and vice versa, second grade student work on fourth or sixth, fifth, sixth grade math. You'd have a book for that student.
The notion of differentiated instruction was very much what Durrell was all about. Will and George at Wellesley were carrying that forward. Chris Simms who started the company, he had been part of the educational group at Raytheon and I think had left there and saw what was going on in Wellesley and he said to George and Will, "Let's start a publishing company. This is really good stuff."
Sal Daher: At Wellesley College?
Frank Ferguson: No, in the town of Wellesley.
Sal Daher: Oh, in the town of Wellesley, the public school system
Frank Ferguson: Yeah, the public school system.
Sal Daher: The town of Wellesley. Okay.
Curriculum Associates Succeeds but Discord Arises Over the Purchase of a Water Cooler!
Frank Ferguson: His first office was in Wellesley when he finally got it going. It was the educators who approached me and said, "I think I'd like you to get involved." I eventually did. As I said, Simms left within a year and the other businessman, McAllister took it over and all of the product that Simms had bought he took home to his garage in Newton and his high school kids mailed out some fliers to the schools. When orders came in they'd go out to the garage and pack them and ship them. Finally it got to the point where they needed to have an office space and this drama over the water cooler had taken place.
Sal Daher: It sounds like a very quaint drama these days.
Frank Ferguson: I think startups often, particularly if they have five equal owners, have frequent issues. Sometimes they don't always agree on where the ship should be headed and what the priorities should be. That was kind of that story.
Then today we are a little over 600 people. We have something like, I don't know, 10 or 15% of the K to eight population and we are very much about differentiated instruction. Today a little over half of it is electronic product. A product called i-Ready, which is reading and math delivered over the internet. Then there are paper and ink products which is what we started with and then still have some paper and ink products.
Competition Gets Rough in the World of Educational Publishing
Frank Ferguson: A product called Ready For Reading, Math and Writing that are very much focused on skills. We have been skills-oriented in our instruction material. The world of educational publishing divides along a dividing line. The smaller part of it is the supplemental publishers. The larger part of it is the textbook publishers. The people like, well, there's so many of them, Houghton Mifflin and many, many, many others publish big textbooks.
That is a world unto itself which I won't get into, but you often have adoptions, district adoptions, statewide adoptions, a lot of fighting, a lot of politicking that goes on, a lot of dirty pool gets played making sure that you're one of the people that gets picked.
Sal Daher: Yes, because there's big bucks at stake.
Frank Ferguson: Then there's what the big textbook publishers call the aftermarket. After they bought the textbook then all that other stuff. That's what we were publishing was.
Sal Daher: Uh huh (affirmative).
Frank Ferguson: Supplemental materials.
Sal Daher: Yeah, so you were eating what they thought was going to be the dessert, the supplemental market.
Frank Ferguson: Well, the crumbs.
Sal Daher: The crumbs.
Frank Ferguson: After they put their major money into the textbooks and they buy all that other little stuff. That's what we were doing. We were successful at it. We had because of the orientation that had come out of Boston University, the materials that we published from day one were seen to be good. People looked into it and, "This is really good. How much is it?" Well, it's 89 cents or $1.49 or $2 and a half or something. Inexpensive compared to a textbook that would be 10 times or 20 times that price.
They only buy the textbook once every five or 10 years and these little supplemental materials are consumable. Kids write in the books and they have to buy them year after year. They're the crumbs as far as the textbook publisher is concerned, but for a company like us it was a nice little business. We were successful at it.
Curriculum Associates’ i-Ready Succeeds by Measuring Progress of Individual Student to Help Teachers Better Support Students – Teacher Training a Pivotal Element of i-Ready’s Success
Frank Ferguson: Today we are at the bottom rung of that major ladder I think. Our online program now has quite a few million students. I'm not just sure how many million. It's a product called i-Ready and it's reading and math and it's online and it's skilled-oriented. It's diagnostic. We have an online test not to grade the student but to evaluate where the student's strengths and weaknesses are and then be able to provide electronic material that is matched to that student's needs, whether it's a fifth grade student needing third grade level material or a third grade student needing sixth grade level material.
We can slot that student. Then we give the teacher a lot of data about her class and about individual students so that the teacher can supplement and be well informed as to the individual needs and to meet the needs of that student. An important part of what we do because teachers haven't gotten that in their undergraduate work, is that we have several thousand training sessions every year where we go into school districts and teach them how to do data-driven differentiated instruction.
Look at the data and find out what that student needs and provide that student with what that student needs. We get phenomenal student gains. We go into low performing school districts and many of those students end up doing extremely well because you're meeting the student need. If you're given a book that's way beyond your level, don't expect that you're going to get much out of it.
Sal Daher: No. No.
Before Teacher Training Was Required i-Ready Saw No Gains – With Teacher Training Student Gains Are Dramatic!
Frank Ferguson: Teacher training, a big part of that. It used to be optional. If you want the training you can have it. Now it's mandatory. You cannot buy this product unless you buy the teacher training. Why? Because we found out that it made a huge difference in outcomes. Those teachers that didn't get the training didn't make good use of the materials and they didn't see the gains.
We didn't see the gains. Now it's a mandatory thing. Today I think many school districts don't think of us as a vendor coming in saying, "Don't you want to buy this book?" Than a partner saying, "Want you to work with us to make our students much more successful." We do and they do and it's a love affair.
Sal Daher: Yeah, well, from my reading of current trends in educational thought, it seems that the product offerings of Curriculum Associates fit in very nicely with the idea of competence of students. Instead of being promoted based on the grades and so forth, but having them develop competence in topics and then they go so they make sure that they're not missing out on anything.
Frank Ferguson: Well, yes. I think there's some of that, but I do think that most school districts do promote year after year and hopefully the student that comes in is able to handle next year's work. If not they hold them back a year. I repeated second grade because I didn't do math very well in second grade.
I didn't have too much trouble at MIT a few years later, but in second grade I repeated it. It probably was a good thing. It was traumatic as I recall. It just happened.
Sal Daher: I think that the differentiated instruction approach that you're talking about fits in very nicely with the idea of looking at every child and seeing how he or she is progressing and making sure that the child learns the full material and isn't left behind by kids who may have picked it up better or more quickly or may have been better prepared when exposed to it. In that sense I think there's a big move towards competence rather than focusing on material changing by grade, but being really tied to the achievement of the individual student. Which becomes much more possible with the use of technology in teaching.
Frank Ferguson: Absolutely.
Sal Daher: That I think is probably very promising for CA in the future as well.
Ugly Truth – Fifth-grade Teacher Has Three to Five Year Grade Span in Her Classroom
Frank Ferguson: The ugly truth is that a fifth grade teacher has got at least a three and probably a five year grade span. There are some kids in that fifth grade classroom that are really working at the second grade level and there are some kids who are probably working at the seventh grade level. The one size fits all model which is where we've come from, doesn't really serve, it serves maybe half to three-quarters of the class and poorly serves those who are bored because they're well beyond it and those who are struggling because they don't get it.
Sal Daher: Enter differentiated instruction.
Frank Ferguson: Exactly. Exactly. It's working. The school districts that buy in get the teacher training and implement it well see tremendous growth. Instant performance.
Lev Vygotsky, Seneca The Younger & Andrew Bell of Madras College – “By Teaching We Learn”
Sal Daher: Tremendous. Tremendous. Now, so explain to me a little bit about your interest in the work of Martin Seligman and also of Lev Vygotsky.
Frank Ferguson: Lev Vygotsky. Well, let's talk about Vygotsky first. In some ways he's the more interesting. The predecessor of Lev Vygotsky goes back to the year 35 AD.
Sal Daher: Wow.
Frank Ferguson: In Rome, Seneca the Younger is writing in Latin those years. They wrote in Latin, 35 AD.
Sal Daher: Yes.
Frank Ferguson: In one of his epistles to his friend Lucilius he writes “docendo discimus”, which roughly translates to I teach, I learn. Wow. I teach, I learn. Then we'll leap up to the late 1700s, maybe 1780, 1790, Scotsman, Andrew Bell has come out of St. Andrews to Madras which is currently Chennai, India, but in those years it was Madras. Madras. He's put in charge of a school or orphans he doesn't have enough teachers.
In desperation he gets the older students to teach the younger students. He is amazed at the progress of the older students who have been the teachers. He comes back in about 1795 or 1800, he comes back to Scotland to St. Andrews. He forms the Madras College within St. Andrews to teach the Madras Method. He publishes some books which Amazon will sell you. Amazon's got reprints of those books. They're not particularly interesting reading, but he lays out how he gets students running the school basically.
That is the kind of the Madras Method. You say to yourself, so what's going on here? Well, the guy who finally puts his finger on it is Lev Vygotsky in the 1930s. He of course heard of ...
Sal Daher: A scholar, a Jew living in Soviet Union at a time of purges, a time of this tremendous pressures and yet he was grappling with very deep questions about learning and so forth.
Frank Ferguson: The connection he makes is that there's an absolutely profound connection between oral language and cognition. What comes out of your mouth has a lot to do with what's in your head. If we go back to 35 AD, one who's “docendo discimus”, I teach, I learn, what's going on? I'm talking, I'm teaching, I'm learning.
Sal Daher: Right. As I talk I'm also thinking ...
Frank Ferguson: It's coming together.
Sal Daher: ... working through.
Frank Ferguson: It's coming together. It's being organized and whether you're getting it listening to me, I'm getting it because I'm able to put it together in an organized way in my head as I talk it through. That was Vygotsky.
Sal Daher: My goodness, this is, well, I'd like to come back to it. I just want to tell a quick little anecdote which addresses this. When I was a boy my dad was doing his PhD in mathematics. His break on Sunday was to make kibbeh, a Lebanese dish for the family and teach us mathematics, particularly my mom.
Of course the math he was teaching us was way beyond our heads, but what he was doing was he was working out these things by talking to us and trying to explain these concepts to us. He was solidifying them, working them out in his mind. I guess Lev Vygotsky would have said that that's what was going on.
Frank Ferguson: Exactly. Yeah.
Sal Daher: I've seen this at work.
Frank Ferguson: Yes. Now I've explained it to you.
Sal Daher: Yeah, it clicks in my mind. This is amazing, so please continue. The thought was that you're working it our as you're speaking.
Frank Ferguson: Right, and so if you look back you can see the threads that come together and Thought and Language is the book that Vygotsky wrote in Russian. It lay untranslated for probably 30 years. I'm not sure, I think there was somebody at Harvard who knew about Vygotsky and got it translated, but Vygotsky by then had died and passed away.
“Talk to Me Baby – How You Can Support Young Children’s Language Development” by Betty Bardige
Frank Ferguson: It goes on. One of my very good friends, Art Bardige's wife is interested in early childhood and she's recently published a really wonderful book for anyone who's got small children or small grandchildren. Her book is entitled Talk To Me, Baby! The book is basically a recipe book of what you do about getting children to talk to you. Ask them why, so what, what does that mean.
Sal Daher: I'm a new grandfather. I'm going to explore that book. Talk To Me, Baby!
Frank Ferguson: Baby! Betty Bardige. She has her PhD in Early Childhood. Art is very interested in mathematics for as an experimental science, getting kids to do math experiments rather than, and to ask what if, not what is.
Sal Daher: My wife is also very interested in child development. She studied at Tufts, got a Masters in Child Development. I think she'd really be interested in this. I'm going to get it for her.
Frank Ferguson: “Talk to Me, Baby”!
Sal Daher: That's tremendous. How did that influence the work that you were doing at CA, these thoughts?
Frank Ferguson: Well, not that much because I am really on the business side rather than the product side. We have people who are even though education was a minor and I had something to do with our product in the early days, I didn't have a lot to do with it. There were many other people who were much more knowledgeable about curriculum and writing that kind of material.
I was never an author. Never really got involved in the product development beyond the financial part of it, making sure we were able to hire the right people and could pay them and so forth. Some of them were consultants and some of them were authors who got royalties and so forth.
Sal Daher: We're doing this right now. As we're talking we're working through ideas. This whole idea of speaking being extremely important as opposed to writing because it's a very natural thing for human beings to do. One of the reasons for this podcast is really for me to learn more about how successful companies are made. By having these conversations it helps me work through ideas that I have and complimented by things that I hear from my guests.
I think perhaps these ideas were expressed more in your work with the startups and some of the philanthropies that you work with in terms of getting them to figure out what their mission is, where they're going and so forth. Having people talk through and this makes me think that I'm going to save this, this idea of Lev Vygotsky for a future interview as well for someone that's coming up who does this kind of work with startups, have them talk through what their business is about and helps them sort out what their business is.
Frank Ferguson: Exactly. The most important thing you can say to them typically is not hear me out, but rather tell me about it. Tell me about it. Tell me more. Why? These are the kinds of things that you probably know why, but you want to make sure that they know why? Because startups are very often exciting because of what they're trying to do. The reality of making them successful has to do with 100 other nitty gritty operational things that maybe they're not that good at.
Visionary Entrepreneurs Need to Hire Grunts Who Are Really Good at Execution – Frank Ferguson Was the Grunt & Amar Bose Was the Visionary
Entrepreneurs are sometimes the right people to run the business, but they're most often the visionaries with the product ideas. They need to hire grunts who are really good at execution and operations. May not have that many new, original, creative ideas, but boy can they make it happen and know who the right people who are bringing it off.
Sal Daher: That was your job at Bose. You were the guy who made the trains run on time so to speak.
How Amar Bose Hired the Smartest of the Smartest for the Bose Corporation
Frank Ferguson: That was what he was asking me to do, yes. He had hired some brilliant engineers who were doing incredible things on the technology side. Amar himself was making a significant contributions, but he had a technical team that was as he said at MIT, "I'm very picky about who I allow into my graduate courses and then for the company I hire the good ones."
Sal Daher: From the picked ones, the ones ... The highly selected grad students. Quite a recruiting approach.
Frank Ferguson: Right. They were wonderful people and still are. I'm very good friends with some of those people to this day.
Family with 11 Children Uses the Madras Method Whereby the Elder Learn by Teaching the Younger
Sal Daher: Well Frank, this part of the conversation about the Madras Method and this whole, the Lev Vygotsky sort of learning by talking or developing ideas through talking, that brings to mind that I know some families that have a lot of children, like 11 children, and they use the Madras Method. The older ones teach the slightly younger ones and so forth and it kind of goes down. As they're teaching them they're learning responsibility.
Frank Ferguson: Exactly.
Sal Daher: Leadership, because I was talking to my wife. I said, "How? Eleven children. Only two parents. They must go nuts." She said no they don't because they educate the first one or two really well, make them really responsible and the younger ones follow along with them. It really is delegation.
Frank Ferguson: Yeah.
Sal Daher: Yeah, that's remarkable. The Madras Method, Bell is the name of the Scotsman?
Frank Ferguson: Well, Andrew Bell, yes.
Sal Daher: Andrew Bell.
Frank Ferguson: Amazon will sell you a couple of his books. I don't particularly recommend them though.
Sal Daher: A little thick and dated.
Frank Ferguson: Well yeah, but they're kind of, I own both of them and they're sort of curiosities dating back to 1790 or whatever it was.
Sign Up at AngelInvestBoston.com to Hear About Upcoming Free, In-person Events – do Review Us on iTunes
Sal Daher: Tremendous. I just want to take a little quick break right now to put a little plug for our podcast and to encourage people to sign up at our website AngelInvestBoston.com. When you sign up to our newsletter we will periodically, not very frequently, make you aware of events and interesting things that are happening in the world of angel investing and startups that come across our field of vision.
We will also invite you to in-person events that we will be holding. It really is worthwhile to sign up and give your email address and your name, first and last name so that we can contact you when these events are occurring. Of course please review us on iTunes because that helps more people find out about the program and it helps get the wisdom of people like Frank Ferguson to more people, which is what I want to do. This is really a project for the ages, Frank.
The experience that you've had is going to be related to people for many, many decades to come, maybe hundreds of years to come I hope. Thanks a lot and I thank the audience for their help in also disseminating these really interesting ideas. Now let's go back to another part of your life. You have so many things that you've done in your life that it's just amazing. I want to see if I can get to them. Talk briefly about your philanthropic work and then let's after that get into angel investing.
Frank Ferguson, Practical & Involved Philanthropist – Lionheart Foundation – Robin Casarjian
Frank Ferguson: Well, I guess I stumbled into it. I didn't really choose. I didn't say, "Gee, I think I should be a philanthropist." I met a friend of my son's who was involved with a company that was dealing with at-risk populations, The Lionheart Foundation. They were in Needham and now are in Dedham I believe. They were founded by a woman named Robin Casarjian who was a psychologist. She had written a book on forgiveness and she was invited into a prison and she thought maybe there would be half a dozen people show up to hear her talk.
Well, when she got there there was something like over 100 people in the room. They were very interested in what she had to say. She published a book called Houses of Healing: A Prisoner's Guide to Inner Power and Freedom. A few years later her niece Bethany Casarjian who has a PhD in Emotional Control and Emotional Regulation joined her and the two of them have written books called Power Source: Taking Charge of Your Life for teenagers who are either in the justice system, at risk of being in the justice system and then another book Power Source: Parenting for teenagers who have children and have issues on top of the issues that got them there in the first place.
They've been at this for something like 20 years. It's a small organization, eight or nine people. They are essentially publishers. They don't for the most part run these programs. They publish the materials, both books for the people who are at risk and rather thick facilitator's guides. If you're going to run a 12 week session with a group of these people, then here's your cookbook. This is what you do on the first session. This is what they've read. These are the handouts. These are the discussion topics. If you can follow the cookbook you can run the program.
They are essentially publishers of these materials. I did have the interesting opportunity to sit in on a 12 week session at the Middlesex County House of Correction in Billerica. This is a couple years ago. There were something like 20 men in the session in that program. At the end of the period 10, 12 sessions the men who walked out of there were very different people than the people who walked in. The transformation was phenomenal.
I find this to be a worthwhile and an interesting opportunity. I'm not really on their board, but I'm an advisor. I go three or four times a year to some of the board meetings and occasionally have meetings with Robin or Beth. They continue to publish new materials. They're just about to publish a workbook for people who are in solitary. I haven't seen it yet so I don't know. I'm sure it's the same core material but packaged up for that opportunity or that population.
Frank Ferguson Does Nothing in Half Measures – Elon Musk Would Approve
Sal Daher: Knowing you, how you immerse yourself in the work that you're doing, I can imagine you're involved pretty intensely, you don't do anything in half measures.
Frank Ferguson: Thank you. My wife has noticed. [pointed look]
Sal Daher: Yes, you're always up to your hips in things, your neck.
Frank Ferguson: There are some others but that's basically the one that I spend more time with than any of the others.
Sal Daher: Wonderful. That's really great to hear. How did you get into angel investing? What was that? You were sort of doing a little bit of investing with CA, Curriculum Associates, and then it drew you in as executive and co-founder and so on.
Frank Ferguson - Angel Investor in the Bose Corporation and Curriculum Associates – Participated in the Baird Atomic IPO
Frank Ferguson: Yes, at Curriculum Associates, George and Will, the two educators, had been consultants and they told me that they were going to start this little outfit. They asked me to get involved and I decided to do that. Angel investing really started more with the Ken Jordan, Amar Bose opportunity. When Ken said that he said he thinks he's going to invest, was I interested, I said well, I didn't know. He said, "Well, I think Amar is one of the brightest people I've ever met and I'm going to put some money in."
Sal Daher: You were an angel investor in Bose Corporation.
Frank Ferguson: Well, yeah. I had worked for a company called Baird Atomic in Harvard Square and I'd made some money there and I put some money in the Ealing Corporation where I was the National Sales Manager and I made a little bit of money there when they went public.
Sal Daher: Baird is sort of a medical equipment ...
Frank Ferguson: Well, yeah. They were applied physics I guess. Walter Baird was an optical physicist. He had this Baird Associates which was a small consultancy and contract research group and then they had a product making spectrometer that would measure the consistence of metals by sparking them and looking at the sparks and putting them through a reflection grading and looking at the metallic components so you could take a sample of iron ore and find out just how much molybdenum was in there and how much other constituents. Then add some, make the brew the way you wanted the iron steel to turn out.
Then he merged with a company called the Atomic Instrument Company that had been formed by some people during World War II were doing instrumentation for the Los Alamos and I think some of the other labs. When the war was over the formed Atomic Instrument Company. Then several years, five or six years before I came along the two of them got together and merged and formed Baird Atomic. The senior scientist on the atomic side was a guy named Hugh Stoddard. When I had to do a thesis at MIT I went through a stack of cards and I somehow or other had heard about Baird Atomic and heard about the Atomic Instrument Company which by then was the atomic division of Baird. I went to department about doing my thesis.
Hugh Stoddard, Father & Son, Piali De & Senscio Systems Senscio Systems Website
Sal Daher: Is that the Hugh Stoddard at Senscio?
Frank Ferguson: Well, I'm getting to that.
Sal Daher: Okay, okay, okay.
Frank Ferguson: Yes and no. When I was finishing at MIT he offered me, Hugh Stoddard offered me a job to be his assistant. I came in to the Atomic Instrument Company or the atomic side of Baird Atomic. Within a couple of years Hugh Stoddard had left. This is Hugh F. Stoddard. We stayed in touch over the years. On one of those occasions he told me that his son Hugh A. Stoddard had married a very interesting woman from India named Piali De and she was doing some really interesting things.
Sal Daher: Okay, he's the son of that Stoddard.
Frank Ferguson: Right. I eventually met Piali and she is as amazing as she is beautiful.
Sal Daher: She's a really remarkable person.
Frank Ferguson: A really, really remarkable person. Both she and her husband got their PhDs at Brown in Physics and after they got out of Brown he went off and did a number of different startup things and she went to Raytheon and got involved in their healthcare, machine learning. It was not healthcare, it was machine learning for military applications. By 2010 the two of them concluded that they could probably join forces.
She left Raytheon. Hugh A. joined her and Hugh F., the man who had been my boss at Baird Atomic,he was part of their board of directors. What they said, we've got this machine learning, artificial intelligence technology. We've got to find a vertical that could pay for it. What they settled on was healthcare.
Sal Daher: Thus Senscio was born.
Frank Ferguson: Senscio was born out of that.
Sal Daher: A company which I'm an investor and you are a very significant investor. Yes.
Frank Ferguson: I'm on their board.
Sal Daher: You're on their board.
Frank Ferguson: What they realized and what I've heard since from a guy who works for the Rand Corporation who has done an awful lot in military contracting, but also has a very large healthcare practice here in the New England area, and I think some in Palo Alto as well. What this guy told me is he says, "We think that the problem of elders who do not follow their care plans and consequently are frequently in the emergency room in the hospital is there largest unsolved problem in healthcare. The lack of adherence to care plans."
Senscio was attacking this and we think they've got a chance of making the needle move. Nobody else who's tried this space has been able to do anything that's significant. If Senscio can move the needle on this it's going to be a very big deal. I did meet Piali and she and I hit it off and she suggested that I might want to become an investor and join her board. I am on her board and the company is doing really well. They're early days yet, but some of that data that they've gotten out of their early pilots, particularly in the congestive obstructive pulmonary disease or COPD, there's a healthcare group up in New Hampshire who has a pilot and the data that are coming out of that are spectacular. They're getting absolutely amazing results in terms of improved health and lowered costs. We're talking 60, 70% lowered costs.
Sal Daher: Wow.
Frank Ferguson: Spectacular. Now can they expand this and will it work with hundreds? That's the next year or two will be the expansion of that and probably bringing in a VC. They're talking to a local area VC about putting in a few million to start to scale it to a much larger area. The need is enormous.
Sal Daher: How many people are enrolled now? Are you able to say that?
Frank Ferguson: There are something, I don't know the exact number but it's something over 100 and there are several hundred more that are in the wings.
Sal Daher: Oh okay, okay. Then the data from that you can get significant data from those types of numbers.
Frank Ferguson: Another six to nine months there will be a lot more data, but the early data, it's a small cohort of about 10 or 12 COPD, but they are the sickest of the sick. They take on the worst of the worst and they're making huge differences in terms of their health.
Sal Daher: Are they still working with the idea of having these various devices in the home that kind of interact with the patient?
Amos Tversky & Daniel Kahneman, “Thinking Fast & Slow”, “Nudge” by Cass Sunstein and Richard Thaler
Frank Ferguson: Yes. People say, "So what are they doing? What is their technology?" I said, "Well, it's a little complicated." First of all, and I think the hardest one to get your head around is behavioral economics. This is [Amos] Tversky and [Daniel]Kahneman [Daniel Kahneman wrote “Thinking Fast & Slow”] who sort of came up with the idea. In the book Nudge, N-U-D-G-E, by one of their colleagues. [“Nudge” by Cass Sunstein and Richard Thaler]
Sal Daher: Yes. Cass Sunstein I think.
Frank Ferguson: Yes, I think he's one of the coauthors.
Sal Daher: One of the coauthors, yeah.
Frank Ferguson: It lays out how you can affect people by engaging them and ...
Sal Daher: Prompting them.
Frank Ferguson: ... and prompting them, nudging them. The book Nudge is the popular book. It lays it out. It turns out that by applying behavioral economics to this population and using some hardware, namely a device that will track them in the home and track your position. If you're horizontal, it's 4AM and you're in the bedroom that's a no brainer. If it's 10AM, you're horizontal on the floor in the kitchen, that's warning sign.
Sal Daher: That's a problem, right.
Frank Ferguson: That's a time to ...
Sal Daher: Triggers an intervention.
Frank Ferguson: Triggers early intervention. Early intervention or just if the artificial intelligence machine learning looking at the data that is accumulating several times a day in terms of what the patient himself is putting in, yes, I took these medications, I was prompted, "John, it's Friday. This is the time you take the blue and the green pill." Oh yeah, it's Friday. I better do that.
If you're elderly and it's Friday you may not remember which of the pills you take on Friday, so the prompting is very helpful. The seniors who are involved are so grateful that this system helps them and holds them accountable. They want to do better, they just cannot at their advanced age.
Sal Daher: Their compliance is good.
Frank Ferguson: If you complied with the care plan, guess what? It's better. I don't know if this is correct, but it's something like 5% of the sickest of the sick account for close to half of our healthcare spend. You don't have to hit it out of the ballpark. If you make a small percentage improvement that's a big financial gain.
Sal Daher: You don't have to reduce costs by 60%. If you reduce them by 6% you're way ahead of the game.
Frank Ferguson: You're way ahead of the game. They have a couple of pieces of hardware, one which a person can wear and then one which is a screen, either a computer or soon to be a tablet. On this tablet come the messages that you may hear it beep and you go over and look at it and there's a message saying, "John, it's Tuesday," or "John, it's 12:00. Time to eat your lunch." Oh yeah, I have to have lunch today, whatever it may be.
Or you have a 2:00 appointment this afternoon with your doctor. Oh, that's right. I have to go to the doctor today. It's seen as being a companion, a friendly, nudging companion that helps you do what you know you want to do and need to do but just haven't the ability separately to always do what you need to do when you need to do it. Medications, meals, whatever.
Sal Daher: Right, right. Of course the people in this program are on it voluntarily. They volunteer to be on it.
Frank Ferguson: Yes, but they're typically picked by a care organization that's expensive enough, 150 to $200 a month. The patient typically doesn't pay. The care provider pays, but they are frequently are in care programs, running care programs fore which if there's a savings over what it's been they get to keep part of the savings. Shared ...
Sal Daher: The care organization. They have an incentive.
Frank Ferguson: The care organizations. They have a big incentive. They have to realize which patients are appropriate. I think it's correct to say that no patient who's gotten this technology has ever refused it, but there have been patients that just simply couldn't even cope with the technology and they had to remove it because the patient was too far gone. Been a few of those.
Sal Daher: The point I was making is because of the frequent criticism of the nudge approach is that people are not given choices. They have a choice to be in this. It's not as if they're forced to use this program.
Frank Ferguson: Absolutely. Absolutely.
Sal Daher: The majority of them want to continue and the ones that don't continue it's because they're just ...
Frank Ferguson: They can't.
Sal Daher: Yes. Cognitively incapable of doing it.
Frank Ferguson: Yeah, they're just too far gone cognitively to be able to do it. That's a small percentage because the care team sort of knows who's able and who isn't. They pick the patients fairly carefully.
Sal Daher: Both as a citizen and as an investor I'm very gratified that, I hope that they continue to make progress.
Frank Ferguson: I think as an investor you're going to be more than a little over-whelmed by what is coming in the next year. Be optimistic.
Frank Ferguson Connects with Will Graylin, Invests in Loop Pay Now Samsung Pay
Sal Daher: Okay. I'll get my checkbook ready! Frank. Tell me a little bit about how you connected with Will Graylin, brilliant entrepreneur, founder of many companies including Loop Pay which was sold to Samsung and has become Samsung Pay. Whenever you go to a supermarket and you swipe your Samsung phone you're using that technology. How did you connect with Will Graylin?
Frank Ferguson: He actually reached out to me. He, like I, enrolled in the graduate program at Sloan. Will is an interesting guy. He was born in China, raised in Seattle, went to the University of Washington. Ended up with two undergraduate degrees, a degree in engineering, electrical engineering and computer science and a major in Chinese literature.
He then served some period of time in the Navy, I think in the submarine corp. Captained the sub a few years and then ended up at MIT in the Sloan School. In Sloan he piled through the information about former graduates and came across my name and called me up and said, "I'd like to meet you." I'm a Sloany and I said, "Sure."
We got together down in Porter Square and had lunch. He started telling me about this loud speaker he designed. I said, "Will, forget the loud speaker. I know that business and you really don't want to get into the loud speaker business." We just sort of stayed in touch over the years. He started some other companies that he wanted to get going on and did. Asked me to become an investor and I did.
He's been a serial entrepreneur. I don't know how many different companies he's founded, at least three, maybe four. I'm not quite sure. I've sort of lost track. I no longer recall the names of all of them, but Loop Pay is the most recent one. He and a guy named George Wallner were the two people actively involved in it. Then of course they have quite a staff and eventually they were able to sell that to Samsung and bail out.
I bailed out as well and made some money on that deal. He's been involved in a number of other companies. Some of which I'm involved with and some not. He's also involved in Senscio Systems where ...
Sal Daher: Oh, he was an investor in Senscio.
Frank Ferguson: ... you and I. Yeah.
Will Graylin and ONvocal
Sal Daher: The other company that's he's doing is ONvocal.
Frank Ferguson: ONvocal, which is a company that is still I think, it started out to be just a headset company, but I think they're going to because of Alexa and all of these other voice activated things it will become much more than just listening to music. It has multiple microphones, has an app for your Android or your iPhone that you can control whether you're listening to the phone call or the music or the ambient sounds or how much ambient, if I'm riding my bicycle down the street, I do want to know whether there's a truck coming up behind me. I may turn the ambient up a bit and turn down the music so I can hear the phone call and vice versa.
That kind of control is what his little product will do. It should have been out this year but I think their pilots are probably a few months behind. I think it will be very successful. He has some other things going that I'm not involved in and I'm not even sure entirely what they are. He's a wonderful person, married with a couple of wonderful kids. Lives locally and he and I have enjoyed each other's company and enjoyed working together.
Frank Ferguson’s Approach to Angel Investing – Invests Where He Finds the People and Technologies Compelling – Few Enough Companies So He Can Make a Real Difference
Sal Daher: Yeah, I've met him maybe three times. He's very impressive, just very impressive. Now Frank, step back a little bit. We talked about your approach to building CA, your approach to work at Bose and now you invest in a way that's very different from almost all the angels that I know, myself included. We tend to invest in a lot of companies and to work closely with a handful. Michael Mark for example is invested in over 200 companies.
I'm invested in over 40 companies and some of the other people that I know. Thirty, forty companies seems to be the norm. You invest in a lot fewer companies, you put a lot more money into any one company. What brought you to that approach and how has it worked out for you?
Frank Ferguson: Well, I guess because I really had no approach. This was not a carefully thought out decision. It's basically I have invested where I find the people are compelling and the mission is compelling and the technology is compelling and I want to be all in. I'd rather be all in rather than have a toe in a lot of different waters, which is more typical of the angel.
Sal Daher: Right, right, because at the stage we're investing the risks are so high.
Frank Ferguson: Yeah, and I certainly have invested in plenty of things that didn't go well. There was a guy named Morton Goulder. I don't know if you've ever met Mort.
Sal Daher: No, I haven't.
Frank Ferguson: Well, he's passed away now. When I met him he was probably in his late 80s and he died a few years later. He was one of the big angels. Lived up in New Hampshire and had been involved in some companies that had gone very big. He had made a lot of money. When I met him he was probably in his 80s. I asked him, I said, "So, what is your thought?" He said, "I've been very, very successful and I think it's my time to give back." He said, "If they don't make it, it doesn't bother me. I'm not in it for the money anymore. I've got at my age, I have far more money than I need. Because it matters to me if I can help somebody be as successful as I've been."
My approach wasn't a considered one where I said I think I will only pick a few companies. It is that I only did pick a few companies. I didn't have the bandwidth to do anything else.
Sal Daher: When you say you don't have the bandwidth, of course I think you're being very modest.
Frank Ferguson: No, but it's real because for me it's the time.
Sal Daher: Yeah. You go in all full tilt with these companies.
Frank Ferguson: I tend to.
Sal Daher:As you have with Senscio. You've had some failures but you've also had some spectacular successes, so who am I are to argue with your track record, which is very impressive.
Frank Ferguson: Well, I had certainly I made quite a bit of money with the Ealing Corporation where I was an employee and I made quite a lot of money out of the Bose Corporation. Didn't have any idea at the time I wrote my first checks how successful that was going to be. It took 40 years so I waited a while to cash in. If you're in a hurry this process is not the right one for you.
Sal Daher: No.
Frank Ferguson: You can't mourn the ones that don't make it. You know going in that some of them, you don't invest thinking they're going to fail. I don't anyway, but on the other hand you just don't know. Somebody once explained to me and I think this is very true and the longer I'm around the more true it is, really fantastic investment opportunities, really great ones are about a dime a dozen. The guys who can make it happen are as scarce as hen’s teeth.
Sal Daher: That is very, very true. The ideas are fungible. It's the team.
“You can get sucked in and fall in love with a lot of things, but then you have to ask, "Are these the guys who can actually make it happen?” What are the odds that these guys can keep together, not fight, get over it, be successful, run things correctly, not fall in love with their own things so much that they lose track of the financial realities of the business? Can they sell?"
Frank Ferguson: You can get sucked in and fall in love with a lot of things, but then you have to ask, "Are these the guys who can actually make it happen? What are the odds that these guys can keep together, not fight, get over it, be successful, run things correctly, not fall in love with their own things so much that they lose track of the financial realities of the business? Can they sell?"
People Come up with Great Ideas, Great Markets but Sometimes Forget that there Is Friction in the World
Many people who come up with the ideas have no idea. They know where the market is, but they have no idea how to develop the market and how long that's going to take. That's kind of the Senscio story. Senscio's got a fantastic story, but there's a lot of friction in the marketplace.
I'll just tell you a little example. I sat in the first meeting that they had with an accountable care organization up in New Hampshire. It was about a two hour meeting and it was the CEO and the Chief Medical Officer. At the end of the two hours they walked out of there with stars in their eyes. You could tell they were totally in love and they were going to buy into this. They did.
They put about 50 or $60,000 into getting a lot of the Senscio equipment up there. A year later they pointed to about 10 people. What's going on? What is going on? If these are the two leaders and 80% of the stuff they bought is still sitting in the closet, they haven't yet deployed it, why? The answer is that the medical world is one that's very sticky and the doctors, their most recent ...
Sal Daher: They're more resistant to change. Very resistant to change.
Frank Ferguson: Well yeah, and they are overburdened, they haven't the time and there's nobody on whose job description it is to deal with that solution. This is something that's new and isn't part of the picture. It isn't my job. It must be somebody here, but it isn't me. Even though the CEO and the Chief Medical, the CMO, both bought in, they didn't get buy in down the line. That's happening a second time with that same organization with the congestive heart failure group, the CHF team.
They've got a, it's again, a chronic illness, it's very expensive. If you follow your care plan you'll be in much better shape. If you don't, it will probably kill you. This solution will really be helpful. The cardiologists are saying, "Yeah, it's pretty good but I don't have time for it. I just don't have time. I'm too busy." Getting that going, I'm sure it will get going, but it's taking a long time within that same organization. The fact that the pulmonologists are now totally aboard and hugely supportive, but it's taken a couple of years for them to get it to come around to that. The challenges of moving it forward are very real.
Sal Daher: Basically the story there is you push on string long enough you manage to push the thing forward.
Frank Ferguson: That's kind of the picture. Patience.
Sal Daher: Patience, yeah.
Lessons from Iran for Angel Investors
Frank Ferguson: I'll tell you and your audience a story. When I first got to Iran some of the older hands had been there said, "Mr. Ferguson, there's something you need to know. If you come here in patient, you're going to learn patience. If you come here patient, you will become impatient." I think it applies to angel investing.
Sal Daher: Frank, it's too bad we're limited in our format by time constraints because I think I could spend three hours talking to you and still not run out of material. This is really a wonderful, wonderful experience to be able to sit down with you and to hear the stories and to hear Lev Vygotsky's theory put into place, that we're learning as we're talking.
Frank Ferguson: We're learning as you're talking.
Sal Daher: I'm learning?
Frank Ferguson: I may be getting something out of it.
Sal Daher: You're learning as well when you're talking and I'm learning when you're talking and you're working these things out. It's just, this has really been a phenomenal experience for me and I'm sure that our audience will share the same gratitude that you went to the trouble on a snowy day to come out to the studio and sit down with us and to talk. I thank you very much, Frank.
Frank Ferguson: Thank you, Sal. It's been a pleasure.
Sal Daher: It's a delight. It's really a delight. Listeners, if you enjoyed this podcast kindly review it on iTunes. I'm Sal Daher, this is Angel Invest Boston, conversations with Boston's most interesting angels and founders. Thanks for joining us. Our engineer is James Willetts. Our theme was composed by John McKusick. Our graphic design is by Maywood Art. This is Angel Invest Boston. I'm Sal Daher.