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Interview of James Hobart by Joan Bromberg on 1984 January 20, Niels Bohr Library & Archives, American Institute of Physics, College Park, MD USA, www.aip.org/history-programs/niels-bohr-library/oral-histories/4676
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Background at the University of Michigan and with Trion Instruments Company. Manager of accessory-product development at Spectra-Physics. Coherent Radiation Inc.; the coherent CO2 laser. Spectra-Physics-Coherent rivalry. Coherent's service and customer-training policies. Sources of capital. Developing a commercial argon-ion laser. The start of profitability for Coherent in 1969.
I wanted to ask, Dr. Hobart, first of all, something about the founding of Spectra-Physics and the initial products and how they were brought to market, how they were brought into a form where they were marketable.
Now, was that a slip? Did you mean to say Coherent instead of Spectra-Physics?
Did I say? I'm awfully sorry.
That's all right. They're a minor competitor of ours. That's, a major competitor of ours. Actually, it might be interesting to — have you talked to Spectra?
Yes, I spent one day there, when I first stayed there, early this week. I talked to Dwight and Rempel.
Oh, you did talk to Rempel.
And Brodick and Goldsborough.
Goldsborough is almost a founder of Coherent, then he backed out. Did he tell you that?
Well, he intimated it.
Off the record. You probably also might want to talk to Arnold Blum, who is with us, and Earl Bellow, who as far as I know is in Arizona. Those were the other two founders of Spectra. Anyway, what we're trying to do here is to talk about how Coherent got started. Gene Watson was the marketing man throughout Spectra-Physics. I had joined Spectra in 1964. The circumstances were that Bob Rempel knew my thesis professor at the University of Michigan, and was looking for people to hire, and my thesis professor kindly recommended me, so Rempel and my thesis professor and I went out to dinner, and subsequently I flew out and visited Spectra and was quite impressed. But at the same time, I was working on an interesting government project at the company I was at briefly after I graduated and before I did join Spectra, so I decided to pursue that rather than go to Spectra. Then a year later I got disenchanted with the government project, with the government, and joined Spectra.
It would be nice to know a little bit about your thesis subject and the project, the kind of scientific or engineering background you were able to bring in.
OK. Cut me off if I digress too far or whatever. My thesis professor was Peter Franken, who is fairly well known, primarily because he's quite an entertaining speaker and people remember him for his jokes. He was a good friend of Art Schallow, who subsequently was awarded the Nobel Prize for invention of the laser, and one of Schallow and Franken's famous and favorite tricks was to have one of them giving a lecture and the other one would come in dressed as a workman with a toolbox, and would come up to the podium and screw a telephone onto the podium with no wires attached to it, and the telephone would then ring, and the workman would pick it up and hand it to the other one and say, "It's for yu." Anyway, under Franken I worked on atomic physics and early work in optical pumping. Many of the people who were working in that field are still active, or have been active in lasers. In fact, there was a conference on optical pumping, of which I still have the Proceeds some place. I can find it if you like. At which — I have it here— '59, I think you'll find — I would like that returned.
I'm not going to take anything that's published, anything that you can get, you know — so you were there in '59.
Right, and if you look through that you'll find, for example, Gordon Gould I remember gave a paper on resonators, so the concept of the laser was anticipated at that time.
Were you also in Michigan when Franken started his nonlinear optics experiment?
Yes. I believe at that time I had graduated, or at least I was working at this company, so I was not actually at the university but I was still in Ann Arbor and still close. In fact, they borrowed equipment from the company I was working for.
What was that ?
That was a company called Trion Instruments.
I have wanted to find out about Trion Instruments. Someone gave me Lee Cross's number in San Francisco, among other things.
Yes, Lloyd Cross. Lloyd and Lee are not brothers, by the way. Do you have — have you seen this book on holography?
I don't know.
It passed briefly through here and then it vanished. Would you like a copy of this? That's the start of what was to become Trion Instruments.
I am interested in Trion Instruments, because they were on of the very earliest firms I know of that made lasers. I haven't been able to find out anything about them yet, except some names and addresses from various people. Why don't we talk a little bit about what you did at Trion Instruments? Were you working on lasers there?
The firm was founded to exploit lasers. In fact, I believe both Lloyd and Lee Cross were working at what was then and may still be called the Willow Run Laboratories at University of Michigan, which was primarily infra-red and microwave physics, and as a consequence, they were exposed to rubies, and masers. And so then when Maiman put together his first ruby laser, they were able to move quite quickly and essentially duplicate Maiman's experiment, and in fact, the very first instrument that they brought to market was essentially Maiman's laser. It was a spiral flash tube around a ruby rod. They additionally cooled it, or at least provided the ability to cool it. It could actually operate in either mode. I'm sorry, I forgot what the question was.
It's just to find out a little bit what you were doing at Trion.
One of the early concepts was saturable absorbers. And I think, at least to my knowledge, the credit for that concept probably goes to — well, at least my first knowledge of it was a suggestion of Lloyd Cross's. I don't know what the historical record shows as to the inventor. As with all those inventions, it's obvious in hindsight, right. Anyway, Lloyd put me to work on saturable absorbers, so basically I was firing ruby lasers into materials trying to, looking at the pulse going in and the pulse coming out to see if the pulse going in would be highly attenuated and then suddenly switch to a, the material switch to a highly transmitting state, so the pulse coming through would then jump up in amplitude. I was also involved in the development of one of the first power meters, which was an energy meter for ruby lasers, actually for pulsed lasers. I think that's pretty much the extent of it. I was there I guess about a year and a half, and unless you want more detail on those projects, that's essentially what I was doing.
So you were very thoroughly in laser work when you decided to come to Spectraphysics.
OK, so let's talk about that and then about Coherent. What were you doing at Spectraphysics then?
At Spectra I had some title like manager of accessory product development, and that's basically what I was doing. I was working on laser modulators, and in those days, in fact, the first product we came out with I believe was the Model 320, electro-optic modulator, and it used KD*P, potassium deterium phosphate, for crystals, to allow the laser beam to be switched on and off at quite high speeds by means of an electric field, sort of a voltage applied to the terminals of the modulator. I was also involved in such things as optics to be used with lasers to expand the beam, to expand it and collimate it, to do interferometric experiments.
It sounds as if you had a little group under you?
I had just a technician. I actually did have access to engineers as required. If I needed electronics help, I could access electrical engineers, who didn't actually report to me but were sort of assigned to me temporarily. And for mechanical work, I was able to access Wayne Mefferd, who later became one of the co-founders of Coherent.
Would this be under Bell in general?
Just to get an idea of where this fits in the —
Rempel was never very much for organization, so in a sense, everyone reorted to Rempel. Now, that of course was not the way it officially was. Officially there were organization charts which changed every so often. But in fact, if Rempel wanted to do something, he would walk in and make it happen.
Remple would say, "What we need is a modulator, that's what we ought to sell and develop."
Yes. He'd probably have Gene Watson in the office, or some of the marketing people, or maybe Earl Bell, maybe Arnold Blum. There would be fairly free discussion.
And how much of a chore is it to design a modulator? What's involved in that kind of thing? Is the physics well known? Is the engineering well known?
The physics is well known. The engineering is supposedly well known, but as you find out whenever you start designing something, there are all sorts of little things that you don't anticipate. For example, how do you make contact with the crystal? You can vacuum coat it, that turns out not to be a very practical way. The method we chose was to press a metallic contact in place, and then of course you immediately discover that the pressing induces strain by refringence in the material, if you press hard enough to get a good electrical contact. If you don't press hard enough to get a good electrical contact, then the electric field doesn't effectively go into the crystal, etc.
We're really interested in this kind of, what the process of development looks like in lasers, you know, in the sixties and seventies. So we're willing to listen to a lot of that, where the ideas come from, where you have to go to get the additional information, if anywhere. The process of invention is a big subject for oral histories. The process of invention in industry is not very well covered.
Well, to digress just briefly on it... I think one of the things that I sort of discovered in the early days, and it was — let me not say I discovered it, I observed it, and then decided that it was a pretty good principle, and probably the guy that I observed it from was Earl Bell. And this was the fact — in fact, I think Maiman supposedly said something like, "If you hit anything hard enough, optically pump it hard enough, it will lase. You know, Irish whiskey will lase," or something like that. Maybe you've come across this some place. So Earl kind of took that to heart. He'd probably been doing it all along. He simply went in the lab and built a system that had a vacuum pump, the ability to put all kinds of gasses into a tube, electronics so he could drive it with continuous discharge or with a pulsed discharge, and all kinds of optics that — reflecting at all different wave lengths. And just started testing materials as rapidly as he could. And that finally resulted in Earl's patent on the ion laser. It was not an ion laser that became commercially successful. It was the Berkeley ion laser.
At least I don't know of any mercury lasers. And then Bridge has done it at Hughes, carried that into the rare gasses, and he became the inventor of the argon ion laser. A similar thing happened I believe in CO2 lasers when we got started. I particularly remember that there was some work going on at Bell Labs, where they were studying the parameters of CO2 lasers, and so they, you know, took very careful measurements of gain versus pressure versus output coupling versus all the parameters that went into the laser, could be varied and so there was a massive amount of data, and this was before the days when such experiments were automated with a computer, twisting the knobs and storing the data. The results of that work appeared, to my recollection, in let's say '68. We started in '66 and took the approach that, yes, there were a lot of variables here, but let's assume that we are in a parameter space where there is only one maximum, and consequently, that there are no saddles in the space. Therefore, we've got it lasing, and now we started twisting knobs, always keeping our eye on the power meter, adjusting it until the power was at maximum, took those values of parameters and said, that's it, and that's the ones we used in the— That resulted in a— that was demonstrated, whenever the Wescon show of 1966 was, but only a few months after the company had been founded.
And I assume that you — well, OK, you did that partly just because you really wanted to get something on the market.
Were you vindicated? Did that turn out to be the best set of parameters?
As far as we know, yes. To this day, no one has found a greatly different set of parameters.
Now, in addition to having to fiddle with parameters to get the maximum power input, what else was involved in those few months of work to put out this laser? Did you have to work about getting costs down?
I think, my memory's a little vague on that, but I don't think we worried about costs at all. Rempel I believe had a philosophy, I don't know if he ever epitomized it in something that became a quote, but it was basically the idea that in a new product like this, where no one knows how long the product is going to be on the market, no one is evern sure who the market is, whether it's going to be used for research or industrial applications or what, do the thing. Get it done. Don't worry about saving a nickel here or a dime there. Get the thing on the market, and then worry about it. He also went beyond that decision, you should probably never cost engineer a product. You should start with a fresh sheet of paper, use what you know about the old product, but a design a new product that has any cost savings incorporated into it. Now, whether that extension of his philosophy is valid, a lot of people will argue with, and I'm not sure I know the answer to this.
But anyway you didn't really worry about the costs in that sense.
Not to my memory. We also took a lot of short cuts. In fact, this is probably a pretty good picture of the thing that was used to define the parameter space...
OK, now we're looking at the kluge.
Right. Unseen in the photograph, back on the other side of the room — by the way, did they tell you that this was a laundry room, not a garage?
Yes, they said it was done at home in your laundry room.
It wasn't my laundry room. It was Gene Watson's wife's laundry room. Anyway, back in the corner was a big ice box, this is a styrofoam ice chest, and a pump, by means of which we could chill the water. I think at one point we even used some methylene glycol or some other anti-freeze, to cool it, because about the time that we got started, some one, I can't remember who, it may have been Patel, reported that the gain of the laser went up quite dramatically if it was cooled. And so we said, oo, jeez, do we have to refrigerate this laser to maximize its operating efficiency? We did the experiments. In other words, ran hot water, then cold water, then chilled anti-freeze, chilled dry ice, I believe, over the laser, and found indeed, that if the output coupling was beyond where it should be, in other words, more transmission through that mirror, that indeed the laser performed quite a bit better when it was cooled. But if you took care to optimize that reflectivity, keep it fairly high and keep the optical losses, that it didn't make very much difference whether it was cooled or not. And therefore we went with the water-cooled design. That was sort of significant later, because our product went on the market, in fact we began shipping — our product went on the market in the fall of '66, and I believe that we shipped the first one in the early months of '67. I should know the exact date because I went off to install it.
Where was that?
I believe it was at Boeing. It was at Boeing, and I believe it was the research lab of a gentleman named I believe George Mulhaney. If you're looking for any anecdotes, it was also quite interesting because I switched it on and it was lasing nicely. The beam was burning a fire brick, heating it to incandescence to demonstrate the well known fact about lasers that they don't diverge. I removed the fire brick, at which point the beam impinged on his sport coat that he had just been given by his wife for Christmas. I later sent him a check to replace it, so that we could have a happy customer. Anyway, back to — sorry, I diverged. Spectra decided that Coherent should not be allowed to exist, and that they should be driven out of business by putting a better product on the market. They chose, on the basis of this article that had been published, to refrigerate their laser, because they thought that a refrigerated laser would perform much better. It sort of resulted in disaster for them in the CO2 market, because when they took it to a showing at a physics meeting in New York, January, '67, it operated for a couple of days, although at far less than the power that they advertised— that product by the way they called the Thermalite — anyway, the refrigerator cooled the tube down to the point where moisture condensed on the tube, shorting out the high voltage electronics, at which point the whole thing sort of exploded. So it was never seen on the market again, to my knowledge.
I see. So in the initial period, this is something I've not heard before, there was a real intense thing going on there to preserve their markets.
Well, they weren't in this market. That was one reason we chose it, was that they, when Gene and I were at Spectra, Spectra decided that they would not pursue the CO2 laser. Now, speculation, as I recall, was that because Earl Bell didn't invent it? Or because Rempel didn't invent it? Or because Gene Watson told Rempel that there was a market for the CO2 laser and Rempel didn't want to hear that because it wasn't his idea? The people at Spectra often talked about NIH, "Not Invented Here," as though talking about it would make it go away, but in fact it didn't. They were a bunch of people as guilty of NIH as I've known.
Now, about the Boeing installation, when you went out with a laser like this —
This was not what we delivered to Boeing.
Yes, I know. When you went out with a laser, was there something you had to do to install it, or you just went there and checked it out, to make sure it was working?
Pretty much the latter. In fact, we were quite proud of that. Actually, that was something probably that we inherited from Spectra. A lot of the stuff that went on the market in the early days really was pretty junky products, and you know, maybe it lased when it was in the manufacturer's lab, but by the time it got to the customer, it was no longer in alignment. It wouldn't stay in alignment. They were tricky things to use. So laser companies rapidly became — in fact, even advertised. Spectra would advertise that you could sit on their lasers and they'd still keep lasing. In fact, they had a sort of fairly humorous ad showing that. So anyway, in an installation basically several— the power supply was shipped separately from the head, and gas bottles were shipped separately from that. You had to hook up the water, cooling water for the laser. I can't remember if we had to put oil in the vacuum pump. I had to make the connections between the, simple hose connections between the laser head and the laser pulse-by, put the gas bottles in, connect them up. Good installation we could do in probably less than an hour, although it took longer than that to train the customer and show him, if it did go out of alignment, show him how to change his optics, show him how to install lenses, to focus the beam down.
Did that also involve servicing? Did you go out to Boeing every so often?
We generally, and still do, service on demand. That is, if the thing breaks, we go out and fix it. Free, if it's in warranty, which is a year, and charge them if it's greater than a year. Some other —
Do you still install?
Sometimes. Well, it depends on the product. It depends on the product. If it's a complicated product, generally we do. In other cases, we will bring the customer here. For example, some of our dye lasers — are very complicated products to use. There are a lot of knobs, although some of those knobs have disappeared since we started computerizing the laser. In that case, actually in the case of our computerized laser, we bring the customer here for a week or two of training, in the instrument, so that he will be able to maximize his use of it.
I was going to say, another thing I'd like to know, in some case like this is, what would be your relation to Bell Labs? Now, Patel would hold at least some kind of patent, then I assume that you would get a patent also, when you developed this, is that a correct assumption?
There's one down here.
Well, those are historical orders, so, there's a similar missing back in this period, when we do this. I frankly don't remember if I have a patent on this. I'm pretty sure Mefferd has a patent on the construction techniques for the laser. In any case, we would be liable to pay royalties to Bell, although it's actually Western Electric or was Western Electric in those days that was the licensing arm. So we indeed did pay royalties to Western Electric. They were quite modest. As I recall, the royalty rate was .3 percent per patent used. Typical of research. They have a formula about these things. But then, if someone infringed our patent, then we could hold them liable for —
By the way, do you have a lot of extras of those, or you don't have those pictures? It would be nice to just put one in with the tapes or the transcript or whatever. OK. Now, as usual, of course I'm ... (off tape)... maybe it might be a new component or a new technique for doing things. All that kind of thing.
Let's see. ...The first CO2 laser, the first commercial CO2 laser that I know of was built by Perkin-Elmer. I don't remember the model number. We used to joke that what they'd really done was just sawn off the corner of a lab bench and put a cover around it, because it was kind of strange inside. It was, for example, driven by an AC voltage, so that the beam in fact pulsed on and off. Perkin-Elmer of course said, "Well, it doesn't matter, because you're just going to be working materials." We said, "It seems like you ought to at least have the option to do that. " So we built, in the first model, the ability to drive it with a direct current, and to vary that current. And then we later built what we called the pulser accessory, which was an additional electronic switch that could be installed in the laser in order to allow it to be driven in a pulsed mode. The Perkin-Elmer laser also used, I've forgotten the name of the material. It was basically a pressed magnesium oxide, no, it wasn't magnesium oxide, it was a pressed material that was very lossy as an optical element, and severely limited, irtran materials is what they were called, it was irtran 4 or 5 or something like that, so that the output coupler became very hot, and distorted the beam during operation.
I believe Coherent can take credit for working through the optical mateials and deciding that germanium was a very good optical material, because it was known to be highly transmitting in the infra-red. Although there was a little bit of confusion about that. It has such a high refractive index that if you just measure its transmission, there's so much reflection at the surfaces that it doesn't appear to be transmitting too well, but once you put an anti-reflection coating on that surface, its reflectivity is, sorry, its transmission is excellent. But in addition to having excellent transmissivity, it also has a high thermal conductivity, so that you can cool it at the edges, and any heat that is deposited by the beam flows out to the cooling system.
When you look at this Perkin-Elmer thing, did you have to buy one and take it home and analyze it, or could you just go to the exhibits?
You go to the exhibits. Nowadays if we have a serious competitor, we go buy one and take it apart, to see if there's anything that's being used that we don't know about, to enable us to intelligently discuss the competitive offering with our customers, to know what our competition is. It's not in a pirating sense, because I believe Coherent has been pretty good on respecting people's patents and things when appropriate. In fact, that's a matter of public record. Where was I?
I had just thrown in that question about how did you at that point in history find out about what Perkin-Elmer's drawbacks were.
I can't remember. I may also have talked with some of their customers. I don't know.
So you had kind of a starting base. The Spectra came out after you, is that right?
Yes. They didn't have a project going on CO2 lasers. In fact, Gene and I thought that made for an ethical leaving from Spectra. We weren't taking anything that had been worked on at Spectra, although Earl Bell may have had a laser running in his lab at one time. But it was not a product that they had on their development, and they had expressed the stance that they were not going to develop a CO2 laser, that they had quite enough to do, and so we stole neither technology nor market from Spectra when we left. Shortly after—nevertheless, they didn't like the idea that we were leaving, and started a high powered project to do us one better by bringing out a better laser that would kill us in the market place.
You see that, by the way, right straight through. I just heard something almost identical, in the academic sphere, somebody was doing something and somebody else who had no intention to do that just rushed right out.
That, by the way, is one thing— in fact, may be why I'm where I am, is I don't like that kind of nonsense. Here, there's no question as to who wins. It's the person who makes the better product. You do get into some messy stuff when you find lies in the marketing of the thing. But in terms of the product being a good product or not, there's very little argument as to who as the better technology, and so it's kind of clear cut, and you can avoid a lot of the rivalries and nonsense that goes into — that you find in both academia and some types of industry.
Now, Spectraphysics, when it started out, a lot of its financing came from government contracts. How did you go about getting the money to live on in the early years?
I don't recall whether Gene had talked to the people at DuPont before we actually left Spectra. I don't think he had, but my memory is vague on it. In any case, the initial money was only $10,000, and it came from, as you'll read in here, I believe — in those days, it was dollar share, and, this is after we split, so divide that by ... 30 for 1 split..so divide that, then I'll give you 22.50, right, so myself and Gene each put up $2250, and the other founders put up — I get 1375, which sounds like kind of an odd number, but it was, I believe, I'm pretty sure our respective ownership was, Gene and I each had 9 percent and the other founders had 6 percent, and the rest was to be used for the outside investors that we were trying to bring in. So that little bit of money carried us for a very short period, while Gene went out and tried to find investors.
We had conversations somewhere in there with Bob Noyes, who was then at Fairchild Semiconductor, a number of other investors that I don't remember came through— and DuPont Corporation, in fact I believe it was called the DuPont Development Department, was sort of a venture capital group within DuPont, and they agreed to finance the company in a funny sort of way. Maybe "funny" is not the best word to use. They gave us a research contract for, I believe it was $15,000 a month, in exchange for, again I think you'll find it in there, in exchange for an option to acquire, to make an investment for shares in the company at some later date. That went along until some time in early '67, when we had done what we had sort of agreed to do under the research contract, namely, we had researched the CO2 laser and developed a product that could be marketed, and our agreement with DuPont basically said that when we had shown that we could make a good CO2 laser, that they would exercise their option to put more money into the company to be used for setting up manufacturing and marketing. When that time came, legend has it, I'm not sure of the truth of it, that DuPont was too involved in overcapacity in textile mills or fiber manufacturer or whatever, just couldn't get anyone's attention as to whether to make this investment in Coherent. As a result, we asked them if we could go elsewhere, and they said it would be illogical to deny you that, and so at that point, I guess, Gene contacted the Rockefeller group. They came out, looked us over, and made an investment of a quarter of a million dollars in early '67.
Another thing I wanted to ask was, what was the world of CO2 lasers like at that point? There was you. There was the Perkin-Elmer, which had its problems. There was Spectra Physics, which also had its problems. Was it just the three of you marketing this thing, or was the country full of CO2 laser manufacturers?
At the moment, I can't think of — ah, Corad was in the CO 2 business. That was Maiman's company. That's the only one at the moment that I can remember.
So it wasn't a very crowded field. It wasn't like, in semiconductors, you sometimes get the feeling it's absolutely cut-throat.
This is almost an old timer in the field, this is John ....
.. end of this tape, it's not...
CO2 lasers were selling well, sorry, were selling moderately well.
To research people like the Boeings?
It was a mixture. It was a mixture. Well, it would generally be industrial research. What can I say? It was a mixture between industrial research labs and people like Bell Labs or universities. I don't recall that many were selling, of the initial ones were sold into industry, although I don't have a customer list from those days so I can't really tell you. But they weren't selling well enough that we were making big profits. In fact, we were losing money. We also decided that we wanted to expand our product base, and that one area which seemed exciting was ion lasers. Again, I don't recall exactly how it developed, but DuPont at about that time, and of course we still had relations with DuPont, had acquired — I think it was — hi .... (omit) DuPont in a joint venture with Batelle Institute had acquired from the University of Michigan the so-called Lethe? patents, I guess it was Emmett Lethe and Patnik's ? patents, and were going to exploit holography, and they formed the Holotron Corporation. And if my memory serves me right, Daniel St. John or St. Johns was the first president of the Holotron Corporation, which was basically some space within the DuPont labs where people worked on holography. And of course, I guess I remember, one of the early concepts was that there ought to be enormous consumer market, if you could have, for example, a color hologram of your ancestors or whatever on the mantlepiece, so there would be Grandad in three dimensional living color.
And the Holotron was looking at things like this, concepts like this?
Yes, although strictly, you know, do the research first and see how this all works.
Anyway, one of the early concepts was, let's make color holograms, and what are we going to do for the color ? Color holography. (Note: there is another voice in here:"If you'd said '67, when I started at Lockheed, and got interested in lasers then and developed we that new host for ? which was an order of magnitude higher popefficiency and all that, we were never able to build the crystals and that's how I got interested in lasers, then by the time I came to work here...
Well, we're almost up to whenever it was: Man: No, that was a miniscule.... Hobart resumes:) How were you going to get colored light lasers? Well, krypton was known to lase, and in all the colors of the spectrum, as this photograph demonstrates. Krypton was also an easily available ion laser. I don't recall Spectra had a product at the time. Spectra always had trouble in those days making a good krypton laser because they had a rather unusual type of ion laser, the so-called radio frequency excited ion laser. It was a very complicated beast, complicated tube, and I believe krypton gave them lots of problems. So we decided, somehow we came to an agreement with Holotron that, in exchange for another contract, that we would develop krypton ion laser so that they could use them in color holography.
By the way, who is making decisions around this time? There were at least five or six founders, five founders, I guess.
Yes, six. Gene was still there. Gene left in the spring of '68, so it was sort of a joint —
Did you sit around in your planning meetings — Did you also have other technical people by this time, this is about '67, working in research and development, in addition to the — Jarrett, Rordan, Mefferd, Watson and you are the people I have down here. Were you making the decisions and running downstaiurs and doing the development work ?
You know, another one you should talk to is Jerry Barker, who's still with us. He's probably off to go skiing about now. To my recollection, he was our first technical hire, aside from the founders. I believe he joined us in the — jeez, I can't recall. Somewhere within the first year, he joined us. So up until that time, no, we didn't really have anyone.
You would do the manufacturing too? You'd actually physically put these things together?
Well, yes. You generally always do that on the first few, just to make sure that it's manufacturable, although as you get bigger, people will show up who are good at — well, for one thing, the engineers gain enough confidence and they learn how to do their job so that it generally goes together pretty well, although to my knowledge, most of our engineers still put together the first one or two, or have a close associate they have a trusting relationship with who will put it together, report, "Well, you know, this doesn't really fit, this is a dumb way to do it, " and there will be some feedback in that early, what's called the prototype debugging phase.
That is really interesting, to me, coming from outside, who doesn't know how a company comes together and grows, to think of you there doing the work, making the decisions, doing the marketing, doing the installation, negotiating with Holotron, the whole —
I wasn't too much — well, I guess I became increasingly involved in those negotiations. You just reminded me that I did actually write the copy for one of these adds, the polymeter there.
I see. I was just assuming, the one thing you did have would be either an advertising firm or an advertising person on the staff, but even that —
Aside from getting that from the advertising agency, I actually wrote that copy.
You just got the heading from the ...OK, so now we're talking about getting the krypton ion laser.
That was a quite successful laser. That was our— well, it went through several stages. This was, I believe, since the work was delivered to Holotron, it then moved into, we modified the design and took it to market, in this form, which was the Model 50, and that was — let me see how much power it needs — if I can find that — it was a watt or 2 watts, something like that.
And who was buying that kind of ?
We had a contract to deliver to Holotron, and once you made a krypton ion laser, it's easy to make, and you just change the tube size a little bit and put in argon instead of krypton and you get an argon laser, which— and that's quite a bit more power, typically three to five times as much, so this would be a 5 or 6 watt laser, as an argon laser. I don't recall who the early customers, for the 50, were. ? should, he has a better memory than — knowing in some areas. The real excitement actually was not in this laser, but in the one that we developed very shortly after we introduced this one, and that was the Model 52, and that was what finally put us in the black, caused our sales to grow very rapidly, and probably decided that we were a serious company.
What was the difference between the two models?
It was in two areas, two main areas, the head and the power supply. We still have some of those power supplies sitting around. We used the cabinets for manufacturing equipment and so forth. This power supply was monstrous. It stood this high and weighed, I don't know how much, it had a very active, run the power up and down. We realized that the ion laser, because it was an arc discharge as opposed to say the full discharges that are typical of like helium neon lasers and that, operates at a much lower voltage, typically tube voltage run a few hundred volts. As a consequence, it's not too far away from what you get when you directly rectify, for example, a three phase 208 volt AC line. So we said, aha, if we directly rectify the line, isolate the laser so that no part of it has to be grounded, and design the tube to match the voltage available directly from the wall, we can eliminate a great deal of the electronics and especially the heavy electronics, so we can make a portable, and a lot of the cost too. One further realization, in an arc discharge, the resistance, what's called the dynamic impedance of the thing is quite low, which means that as you vary the current to the laser, the voltage doesn't change very much, so that a small regulating element, namely a bank of transistors, was able to vary the current to the tube while still not requiring any transformers or anything.
Who's the "we" that's making all these realizations? Did you meet every day and sort of talk over what's going on? What's the creative process, and in whom is it going on?
I'd say, Gerrit. Gerrit was the one who defined the materials for the plasma tube, although — well, let's see. Gerrit read the literature and said, "Hey, Raytheon reports that graphite has a very low erosion rate, and "—he in fact at Raytheon, not Gerrit but whoever this was, it'll come to me, had made small ion lasers which had run for a thousand hours of so with very little evidence of destruction of the bore, and in fact, he had built them with different materials in the bore, like tungsten and — and tantallum, don't quote me on that, I think it was just — and tantallum, I don't think he had tungsten in there, and graphite, and then he'd shown that graphite was far more resistant to erosion than the other materials. And he had made a tube.
It wasn't a terribly practical tube, because there was no good way to support the graphite in the tube. So Gerrit made some early tubes similiar in construction style to Raytheon tubes in which he used graphite, showed that indeed, he got quite a bit of power out of those. Mefferd, the mechanical engineer, said, "There's got to be a better way to make this, " so Mefferd came up with the idea to support the graphite on a tungsten rod, put an oversized quartz sleeve around it, pull a vacuum on the quartz sleeve, heat the graphite inside to a high temperature, at which point the quartz under the vacuum shrunk onto the graphite, and formed a support for it. As the thing then cooled off, the graphite, having a higher expansion coefficient than the quartz, pulled away, but not very much, and furthermore, since it had already been at as high a temperature as it would ever be, it would never be at that high a temperature again, when the laser went into operation and the graphite heated up, it didn't expand far enough to break the quartz, although there were some tricky little details in there that had to be worked out, which I can go into if you like.
It would be interesting to know about how much time that takes, to get this product, all its little wrinkles ironed out.
It's highly dependent on how motivated you are, maybe how hungry you are, how well you're working with your contemporaries, whether you can really have a good back and forth meeting at which ideas are allowed to flow, whether you act in a way where someone has an idea, you say, "Damn, let's go off and try that," and you run out in the glass shop and — you know. Experiments, working out design details, and questions where there are design questions, can we do it that way?— I've seen take months and months and months to make a decision that could be done in an afternoon. Like, I could run out right now and find a piece of graphite and put it in a glass lathe and find a piece of quartz, and shrink that down. Or, you could sit around and theorize and construct a facility to do the experiment, and make detailed drawings of how to do the experiment, and so on and so forth.
Like company style?
No, I think it's just —
Or it happens both ways.
It happens both ways. I can even find myself oscillating sometimes. I'm just lazy, maybe I've been in the business too long, so I just don't get around to doing the "quick and dirty" experiment that would tell us a lot of things.
That's interesting. Especially to people like me who mostly grow up on development of theory, we don't really have a feeling for how objects come into being, you know. We learn about the development of quantum theory, this kind of stuff.
It's pretty difficult to make an experimental science out of history! Unless you've got a time machine and can go back and tinker with the past and see how it changes things, the development.
That would be fun. So now, did that get you into a real race with Spectra Physics at this point, putting out an argon laser?
Well, we were becoming better than Spectra. Yes. So anyway, when we —I think all through the existence of this product, which was not very long, it was maybe a year from let's say mid-'67 to —
This krypton ? or the first Model 50?
Yes, with the big power supply. I believe it was roughly the summer of '67 to the summer of '68, let's say the fall of '68, because I believe, and again I can probably find it in old literature, that the 52, here's a picture of that, was introduced in the fall, at a ? conference or something like that, of '68, and that was a market sensation. It was smaller, lighter, quite reliable. You'll probably want a copy of this... thirds of the dimensions in height and width of the old Model 50. It was roughly the same length. The other dramatic difference was, and the one that really made the market take note, was the price. In retrospect, we probably underpriced it, but, something about not worrying about split milk or something—- the competitive lasers which in this case were, well, it was mainly Spectra, they were priced, I don't recall exactly, but it was roughly 22 to 25 — maybe 25 thousand dollars, so our price at 10 thousand dollars was just dramatic, and we were making as much or more power. There were as lot of questions, early questions, was it as stable? Was there as much noise on the beam? And so on and so forth. But it rapidly became apparent that this was the way to do it, and that their product was in effect obsolete, which they admitted when they essentially dropped their product, so that we were essentially alone in this market for two or three years.
And what was this market? Was it still industrial research?
No, this one was mainly spectroscopic research, so, Bell Labs was a big buyer of this particular laser. We sold a lot to Bell Labs. A lot of the universities. Anybody involved in crystallography, too. There was a probably a lot more holography going on in those days than now. But the spectroscopists, one of the early markets was in Ramen spectroscopy, where the Ramen effect had been known for many years, but was difficult to exploit experimentally, and the laser just, you know, made an orders of magnitude difference in the signals that you could get.
I didn't know that. So how many of a thing like that would you sell a year?
Well, let me just recite a story about Coherent's earnings, sales and earnings. If I remember correctly, our sales — actually, it would be in this thing. Yes. In fact, there's no need to recite them because you can just look in here. Here's our gross revenues. Sorry, one thing that's not shown in this is 1971. This was 1970 for the full year. I'm writing this into the prospectus. Revenues were approximately six million dollars.
That is quite a leap from 3.8
Well, this was the first six months, so it should be fairly compared with this number, but it's essentially the same comparison. Actually, you can see it right here. We did a half a million dollars in the first full year of existence, 1967. 1968, we went to a million dollars, which was a doubling, but a doubling from a very low base, so it didn't mean too much. Then late in this year, actually at about the end of the fiscal year, we introduced the Model 52, so our revenues tripled in 1969 from '68, merely on the basis of that product, and then went on again to double in 1970. And thereafter probably never saw that growth rate again. And if you look down at the net income line, you'll see that we lost about $200,000 in 1967, that was reduced to about $100,000 in 1968, and then suddenly in 1969, we were making very good money, although we have to see this extraordinary item which was a tax benefit, so here's the operating earnings, as we call it, so it was about 8 percent or something after tax, and then here you'll see that our earnings had suddenly jumped to more than 10 percent after tax in the first six months, and I believe that was reflected for the full year.
So the first six months of '70, they jumped up like that from '69.
Yes, we made more in the first six months of 1970 than we had earned in all of 1969.
Well, somebody asked me the other day when lasers started to become profitable, and for your company, it was the turn of the decade.
That's early, it seems.
It's not unusual if you have a hot product. You'll see that, I don't know about history, but I once read the history of General Motors, since I was born in Flint, Michigan, and I believe that was very quickly profitable also. You see it today in software development, especially a guy writes a hot program. Lotus Development Corp. went from zero to annualized sales of 50 million dollars in a year or so.
How big were you getting in terms of personnel at this point?
Oh, those numbers might be available some place, but a good rule of thumb is that in these pre-inflationary days, we were probably producing revenue at the rate of $40,000 per employee, so if we take six million dollars and divide it by 40, we get 150 employees. That's probably too many. I would guess it was closer to 100 but I don't know.
And you were just one firm, one building, one establishment, or were you already proliferating?
Yes, we were proliferating, because we started in quite small quarters. You know, another guy you might want to talk to to get some, shed some light on the manufacturing side, is Gordon McFadden, who I think is Spectra. And he was our first manufacturing manager, and he's been manufacturing lasers ever since. But he was rapidly, you know, as production kept increasing, he rapidly had to get new space, so I believe at the peak, which was probably — we moved into this building, I believe in '72, so probably in '71 or '72, we were operating out of five different locations, all within say five or ten blocks of each other, and down in an area of Palo Alto that is sometimes called the industrial slum, and there's another name, but it's regarded, in those days was regarded as an area that got a company started, and you either were successful and left or you went bankrupt and departed. Actually, there used to be a joke that we operated out of six locations, because — I think Plant 5 was the code name for Ernie's Bar, which was down there some place. After work, in the late evening hours, we were often discussing the latest ideas there, recruiting some employees, or whatever.
I see. So through '70, you were selling the CO2 laser, a little bit the krypton, and phasing that out, krypton?
No, the 50. The krypton has stayed with us over the years.
OK, but the argon —
Yes, basically we replaced the 50, which was the big bulky one, with the Model 52, which the nice slim, higher performance, lower cost, lower priced unit.
And is that pretty much your product line then?
Well, there was something else that Rodan mentioned to me, that I want to talk to him about, that's the laser power meters. And anything else that we ought to do something about ?
I don't think of anything else very significant in '70.
In '70 then you went on the market with your stock.
Yes. Raised a million dollars. Just for the record, we raised a quarter of a million dollars from the Rockefeller group in early '67, and then we got an additional private financing in early 1968 of about a quarter of a million dollars, those are also in there, from a local investor group, sort of headed by Franklin Johnson. His middle name is Pitcher. His mother, it was some ancient name in the family. He goes under the name of Pitch. He headed up the group of, I believe it was five guys who do investments together, and they put in a quarter million dollars in early 1968, and then the next infusion of money into the company was the public offering in May of 1970.