Oral History Transcript — Dr. Fred Burns
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Interview with Dr. Fred Burns
Fred Burns; March 30, 1987
ABSTRACT: Burns was one of the original groups of senior scientists at Theodore H. Maimans firm Korad. Burns left Korad to found Apollo in the late 1960s. Burns, after briefly relating his prior work history, tells how he was recruited by Maiman. He discusses Union Carbide’s financing of Korad; Korads venture into semiconductor lasers; why patents were not a deterrent in the early days; developing the laser for market; Korads government contracts; the availability of venture capital for laser firms; Maimans management style; and why Maiman left Korad. Burns also discusses founding Apollo; its size and markets; licensing under various patents; foreign markets, and why Apollo (and Korad) eschewed the medical market.
I got my PhD in physics at Columbia University in 1954. I was there with Malcolm Stitch, and also with Gordon Gould, although I didn’t know him. This is because I was then very busy. I was teaching mechanical engineering at CCNY, I had an infant child, and I was pretty much rushing in, taking my courses, and rushing out again. Shirley Leon Quinby was my professor and my thesis was on order-disorder in copper-gold alloys. After I graduated, Arthur Schawlow recruited me to Bell Laboratories. There I worked on the properties of silicon and germanium, the piezo-resistive effect, the Hall effect, and similar topics. I left Bell Laboratories in 1957 and went to Tungsol Electronics for a year. There I set up a silicon rectifier line which turned out to be one of the first in the world. Tungsol was a cultural shock for me, a profit-oriented firm where making sales was central. I left after a year for RCA in Somerville, New Jersey. This was RCAs semiconductor factory. I had the position of silicon transistor manager, and was responsible for the development of transistors. It was a time when there were not enough people to fill the jobs in the semiconductor industry and so I could walk into a managerial position with little device experience. No one had experience. I found, however, that I didn’t like working for a large corporation doing development work closely associated with factory production.
I had a friend, Richard Geiger, who worked for Emery DeVegh, a well-known Wall Street investment banker and venture capitalist. Geiger asked me to look at a Los Angeles company called Solid State Radiations. DeVegh had invested in this firm and was worried about how it was developing. And they had reason to be worried. The entrepreneurs were from Hughes. The president, originally a physicist, was a promoter and salesman. Though he was honest, no one trusted him because he was so crazy in his business decisions. The other ex-Hughes scientists nevertheless stuck with him because they were riding on his ability as a promoter. I worked with the company for a while but the situation was so crazy, and there was so much tension, that I told Geiger that I had to get out.
When I moved to Los Angeles, into a house in Pacific Palisades, my neighbor was a man named Ted Maiman. He was at Quantatron at the time and was about to form his own company. Maiman told me: “I could use someone like you. I’ll teach you about lasers.” So it was decided that I would go into Korad with him. What I shall say next is part hearsay and part conjecture on my part. Allied Chemical had bought Signal Oil in the latter 1950s and in this acquisition; they got Quantatron without knowing it for a while. After 6 months or a year, they looked down the list of companies they had acquired, saw Quantatron, and wanted to get rid of it. Maiman then went to them and suggested that they make a laser company out of it and get rid of Quantatron’s other activities. Allied said no. Maiman then went to Union Carbide and said, “I’m talking to Allied.”
(This part is strictly speculation on my part.) Union Carbide perked up its ears and decided to back Maiman. Union Carbide had turned down an opportunity to have a pioneering position in electron beam welding years before. The inventor had come to them and they had chosen not to back him, in part because the technology is done in a vacuum.
Union Carbide was looking for technologies that used gases. Now the company saw that the laser could be used for a welder that didn’t need vacuum, and that would supplant the electron beam welder. It had identified a market, and a product. One of Korads most important contracts was to be one to develop the laser welder for Linde, the Union Carbide subsidiary. Union Carbide put a non-trivial amount into Korad; more than one million dollars and perhaps as much as three million. Only Maiman knew the exact terms. Union Carbide got 80% ownership and we got 20%. Of that the lions share went to Maiman, and the rest was divided among 9 or 10 of us. Gilmer was one, me, Bernard Soffer, Ray Hoskins, the two Pastor Brothers, a man named Ozeroff who came and went again quickly, and some others. After the third year, Union Carbide had the right to pick up 20% of our shares 40%, after the fourth year, and another 40%, after the fifth year 20%. The price was to reflect our level of sales. Union Carbide provided the whole of Korads capitalization.
Korad started November 1, 1962. That’s the day that I reported to work. That same day the gallium-arsenide laser was on the front page of the New York Times. The Times was then publishing an experimental Western edition and I was a subscriber. I took the paper in to Ted and said: “This is what I can do.” We were then at 2520 Colorado Avenue. I picked a room and began to buy equipment. I got a Heavy Duty furnace, a strip heater, forming gas, etc. I had never worked with compound semiconductors before and it was tricky, learning to diffuse the dopants. We used a razor blade to cleave the crystal to get parallel reflecting surfaces for the cavity. We used a Union Carbide cryogenic apparatus to cool to the liquid nitrogen temperatures then necessary. They made us a special unit. In 6 months, I had made GaAs lasers. I wrote a proposal for a $50,000 contract to the Signal Corps to work on GaAs lasers but lost out to IBM. Semiconductor lasers were fun, but they couldn’t bring in sales dollars. I sold the package, comprising the laser and the dewar from Linde, for $6,000 -$7,000. The diode alone I sold for $1,000. But only research laboratories bought them. In all of 1963, we only sold about $100,000 worth.
Semiconductor lasers had high efficiency. They could convert electricity to light. They were beautiful. But the power was very low. They were hard to control and use. Light came out in a line, which was a difficulty. They gave out infrared light, so that you couldn’t see the beam. Good detectors at their wavelength, which was about 0.9 micrometers, were hard to obtain. They were good for short—link direct communications. Some clever companies jumped in and marketed them in products like security links around secure installations. I told Maiman that we couldn’t earn money on them. Consequently, at that time, Maiman made me manager of operations. I had all the commercial products under me, the drafting and the machine shop. Gilmer had the military products, and Rick Pastor had materials. Ray Hoskins had the Physics (Device) department.
[In answer to a question on patents]. No-one worried about patents. They worried about making a good laser. One could get a license later. The market was too small. Who’d sue a company making just a few hundred thousand dollars in sales? Once you had signed up for the license, it wasn’t a heavy burden, some small percent of the price of the laser head. (In contrast, Patlex wants 5-6% of the whole system.) In all my life, I have paid a total of about $200,000 for royalties, including licenses from Hughes, the Schawlow-Townes patent, Western Electric patents.
[In response to a comment that a former Korad R&D scientist had told me that Maiman was slow in releasing products to the commercial market.] R&D people think that all you have to do is turn over your results to the engineers and you have a product. But development is a lengthy process. Ruby bubbles. Coatings blew up all the time. It was necessary to train a glass blower to blow the quartz flash-lamps. As an example, we had a product called the model K 1500, comprising a 4 inch laser oscillator and an 8 inch amplifier. It put out a gigawatt, which was then the highest power marketed. The ruby was poor in quality. We did calculations that showed that there would be major component damage after 300 full-power shots. This was an item selling for $45,000 to $60,000. Only a few laboratories could afford this expense. You have to remember also that the infrastructure was not there. Just a few laser companies now make their own coatings, but we had to make our own. The Kerr cells for Q-switching gave terrible trouble. Rotating mirrors were worse. You didn’t know when the switching would take place. There was mechanical vibration. The mirrors were often prisms, and the spines of the prisms would damage. Maiman was concerned that the products work.
One important strategic decision Korad made was that we stayed with helical lamps. Space-Rays and Raytheon used straight line lamps and both went out of the ruby business. Helical lamps were better in those days because more energy was needed for threshold because of the poor quality of the rubies. The helical lamp gave a more uniform pump field which was important because of inhomogeneity’s in the ruby. It’s true that every time one had to change such a lamp, one had to disassemble the entire head. This was a serious disadvantage. On the other hand, you needed a lot of linear lamps. Once you went to 4 lamps, and used double elliptical reflectors, the result was as complicated as helical lamps.
[In answer to the question of whether TRG Inc., was an important competitor.] TRG only figures in the story because it got the first contract and never made a laser. The government guys were very disappointed. On the other hand, Korad got a lot of government contracts because Maimans reputation was superb in government circles. We really had no competition. TRG and Trion sold almost nothing. Hughes sold YAG target designators, not commercial lasers. Korad was one of the first companies to make YAG rangefinders and target designators. Government contracts were very complicated. It was easy to lose money in penalties on fixed price contracts. Gilmer had trouble adjusting to this situation. For its part, the military was unbelievably forgiving. It poured in money. Some government procurement contracts were almost R&D contracts. They were for complex equipment’s which needed a lot of development. Our only commercial contract was the Union Carbide welder contract that I mentioned. Our connection with Linde through Union Carbide was an advantage. Linde made crystals-by the Verneuil technique. We paid the same price as everyone else but we had inside information on the technology. We could visit, look at the laboratory, and talk to the engineers. We also got breaks on quality. It was easy to go into lasers because the investment community was so excited about them. For this reason, there were more startup operations than the market could support.
Optics Technology was a firm that would jump in on any market that offered a possibility. What they sold was usually junk. Buyers at the start would buy from almost anybody because there were no standards for the products. We made good products compared to others; we tested them, worried about quality. We got a lot more competition later, but then we were in strong shape. What killed Korad is that Maiman decided he didn’t want to be part of Union Carbide. He formed Theodore H. Maiman Associates.
Hoskins and I left to form Apollo. In 1968, the investing public was still thrilled with lasers. We raised $800,000 from Kleiner-Bell, an investment banker. Kleiner-Bell agreed to be forthcoming with the money if we met certain goals, which we met. We were in the science market. We sold holographic lasers, ruby lasers, small carbon dioxide lasers. We had some peripheral business in industrial applications; for example, a 50 watt laser for cutting cloth and paper. We did about one and a half million in sales, and sold about 100 units a year to laboratories for stress analysis, wind tunnels, to physicists. At that stage we had perhaps 30-35 employees. Ruby was still the high power laser then, although the glass laser was coming up. We sold 100 joule Q-switched glass lasers to, I think, Livermore. We sold a big Thomson scattering laser to Culham Laboratory in the UK. American Optical was our competitor in the field of high powered glass lasers. It was a small, specialty market. Each customer wanted something which had to be custom-designed for them.
Then in 1970 the lights went out in the science market. The public was anti-technology. All R&D spending went down. I went to the market on October 4 1970 to raise money and got in just under the wire. The Over the Counter market dried up two months later. In order to survive, besides going public, I diversified. Korad had been heavily weighted toward government. At Apollo we had no government contracts. As for patents, I recall I negotiated licenses with Hughes, Western Electric and the Research Corporation. My recollection is that I got the Schawlow-Townes patent from the Research Corporation. I know I would not have given money for Townes maser patent. Research Corporation was not aggressive. Hughes was more aggressive, possibly because they were closer. Hughes wanted us to license the Maiman and Hellwarth patents. We put it off as long as possible and then signed up. We paid no royalties if the product went to the government or to a university project sponsored by the government. The Schawlow-Townes patent fee was very reasonable, and the patent itself was fairly old, and didn’t have long to run. With Western Electric, I diddled a long time. I knew Apollo was too small and that they would not go after me.
Finally, I signed up for the Patel CO2 patent. The Gould patent was different. Gould first gave patent rights to Gene Lang at REFAC. Lang called me in about 1975 and I said no. I was taught a patent had to teach something useful and I just didn’t think it was a good patent. People who understood the technology did not think Gould deserved royalties. Lang did not make an effort to enforce the patent. Then a company in the retail stores business bought the patent from Lang, spun off Patlex, and put Richard Samuel, a smart, aggressive, resourceful lawyer with an engineering degree, in charge.
[In answer to a question on foreign sales] Europe and Japan were good customers of Apollo until the mid-1970s when they became strong competitors. Germany and Switzerland competed in the eximer and YAG lasers. It then became essentially impossible to sell these in Europe. Japan very selectively chose lasers for high-power industrial applications. They were also more interested than US manufacturers in spending up-front to try out new technology. At Apollo, 40% of our market was to foreign buyers. My Japanese representative was one of my best, and knew the technology very well. We had a close relationship. At Korad, Maimans style of management was carried over from the scientists tendency to let the other person do his own thing. He trusted me, gave me responsibility, and was easy to work for. He got more involved in the materials work. Pastor was a very good, senior guy. Union Carbide had a lot of interest in the materials work. Maiman had more interaction with the military division because the wrong contract can be very damaging.
[In response to a question about R&D policies] At Apollo, it was mostly D and no R. I believe small companies shouldn’t do research. It is important to be close to the product. Our first year, 90% of our budget went to development. The second year we started to sell, although at a loss, and about 50% went to development. Korad was different because all its founders came out of big industrial laboratories and had an interest in research, and also because the laser industry was at such an early point in its history. Korad did way — out material research. We investigated calcium tungstate; we investigated spinelles, which at that time appeared to have the promise of a good laser material. We worked on the Verneuil process. The lamp group under Ozeroff, for example, worked on annular lamps with different kinds of gas fills. We went through a lot of money looking at materials. Korad never went into medical lasers.
My personal prejudices prevented me from entering the market and this was an error. We were the first manufacturers of carbon dioxide lasers, even before Coherent. We had the first pulsed argon lasers. We decided, however, that the medical market was too difficult. There was the FDA to deal with. We didn’t know the market. Korad had one of the best technical teams in the country, but it was not strong enough in marketing, and we didn’t have good marketing guidance. I didn’t like working with doctors. We had some coming from Stanford to see about the ruby laser. One man was exploring their use in taking off tattoos and he tried out his technique on a black employee and burned him badly. We had a crazy man from a dental school trying to seal cavities with a laser. These men didn’t think the laser part of the problem through. Doctors have the attitude that medicine is what’s important and everyone else’s discipline is easy. They not only didn’t understand lasers but didn’t want to. As a result, we wound up selling some CO2 lasers to people in other companies who used them in medical systems. The people who made the money were those who designed the delivery systems, with a usable articulating arm, or the digital feedback systems.
Electronic companies in medical lasers have been mainly non-laser companies. Coherent, Sharpland, and Cooper Laser Sonics are exceptions. Layman’s company is another exception, although she has sold that company to Johnson & Johnson. In medical electronics, you need to work closely with a medical institute or group. You need their expertise, but you also need the hospital or physician connection on your publications. Doctors form a very tight, inward-looking community and won’t pay attention unless a member of their community is involved.