Cultivating a Breeding Ground for Entrepreneurs in Orange County
The growth of the medical instruments industry in Orange County has been nothing short of phenomenal. By 1992, we employed nearly as many medical instrument workers (8,838) as Los Angeles County (9,413)--a county more than three times our size. Today Orange County has only 1.3% of the total number of U.S. manufacturing jobs, but about 4% of the nation’s jobs in the medical instruments and supplies sector are located here. It seems likely that Orange County has more jobs in this industry than any other county in the nation.
The start of the medical products industry in Orange County can be traced to 1961. Lowell Edwards, who was working with the University of Oregon medical school in developing a heart valve, decided to move his company to Orange County to escape the high rate of taxation in Oregon.
Several aspects of Edwards’ leadership were particularly important in shaping the medical care products industry. He was incredibly astute in recruiting people who were bright, creative and entrepreneurial. But his intense focus on specific technologies made it difficult for him to accept the advances and innovations they recommended. This led many to break away and start their own firms.
Don Shiley, a chief engineer at Edwards Laboratories, thought he had a better idea for a heart valve. He proposed using a disc rather than a much larger and heavier ball to regulate blood flow, which would result in the heart not having to work as hard. When Mr. Edwards did not encourage him or provide development funding, Shiley started Shiley Laboratories, Inc.
Similarly, Jim Bentley, a sales engineer at Edwards, came up with an idea for a bubble oxygenator. Bentley’s idea ran counter to Edwards’ fixation on an oxygenator that would use membrane technology. Although Edwards’ concept ultimately proved correct 20 years later, Bentley’s bubble approach filled the needs at the time. As a result, Bentley Labs soon supplied 70% of the oxygenators used in open heart surgery.
Another Edwards associate, Warren Hancock, thought of using a heart valve from a pig rather than an artificial valve. When Edwards didn’t see this as a logical product line extension, Hancock Labs was formed and became a technological innovator in the development of porcine heart valves.
Bruce Vorhauer, vice president of R&D; at Edwards, discovered that the sponge-like material used in cardiovascular applications could be used in the vaginal area to fight infections and venereal diseases. He founded VLI to manufacture this new material, which also proved to be an effective, albeit short-lived, contraceptive aid as the Today sponge.
Yet another engineer at Edwards, Ted Gourley, founded CDI when Lowell Edwards did not see the potential for using laser technology as a faster way of measuring gas values during open heart surgery.
George Smyth left Edwards, where he was vice president of sales and marketing, and joined Interpore as president and CEO. There he saw the potential and developed materials from coral reefs to be used as a bone substitute in dental implants.
These entrepreneurs represent only the first generation of Edwards Laboratories and they, in turn, have spawned second and third generations. Edwards Laboratories and its offspring have made Orange County a medical products powerhouse.
The fact that an industry serves as an entrepreneurial breeding ground has important implications, particularly for an urban area. If Orange County is to retain its entrepreneurial talent, we need to be mindful of the kinds of attributes that will give the county locational advantages over other areas.
It is important, for example, to be mindful of land planning and zoning requirements that will enable companies in a particular industry sector to locate near each other, thus benefiting from the cluster economics that are formed. In addition, fostering technology transfer with institutions of higher education will make it more likely that companies’ entrepreneurial spin-offs will remain in the county.
Not to be forgotten are those elements of a public infrastructure that relate to efficient and economical energy, telecommunication and transportation. And remember that Lowell Edwards’ decision to leave Oregon and relocate in Orange County was based on Oregon’s high rate of taxation. Other important factors in choosing location include the quality of education and the presence of vibrant arts organizations. And even little things like the number of available boat slips may not be so little.
In an increasingly competitive global environment, doing the things that retain entrepreneurial talent should be seen as an important goal of our community. Otherwise, we may experience the kind of brain drain that has led to other communities’ socioeconomic decay.
