Capitalist with a soul

Such excitement! It's palpable in the bright, clean laboratory as Madison-area elementary school kids conduct an experiment at Promega's BioPharmaceutical Technical Center in Fitchburg.

Nineteen children clad in lab coats and safety glasses are working in teams on a project involving fermentation and carbon dioxide. One of the parents in the room remarks on how the kids' demeanor changes once they slip on the lab coats.

In a flash they're transformed into scientists doing exacting research.

Off to the side and watching closely is Virginia Henderson, retired head of the Madison school district's minority achievement efforts. Henderson founded the African American Ethnic Academy, which brings these kids--mostly black, but a rainbow of other colors, too -- to the Promega biotech labs for a two-week summer program.

Their endeavor has deep roots. Henderson has worked with the BioPharmaceutical Technology Center Institute -- Promega's educational nonprofit -- for 18 years on science education for minority children.

"These kids push their teachers," she says. "I get calls: 'Virginia, what are you doing out there? These kids are in sixth grade, and you have them working on ninth-grade science.' I say: 'Wonderful. Change your curriculum.'"

Danica Washington, an exuberant fifth-grader in her third summer at Promega, is a good example. "She's always been interested in science," says her grandmother Carol Russell. "But after coming here she's fascinated with NASA, and we took her down to Huntsville [Alabama] to see the space program."

This last class ends with a graduation ceremony. Each child walks to the front of the room, shakes Virginia Henderson's hand and is given a certificate. Pizza follows. Amid the happy chatter, the worrisome "achievement gap" between minority and white kids doesn't seem so daunting.

Chalk up another quiet success for a preeminent business in Dane County's new economy: Promega Corp, 2800 Woods Hollow Rd. This prosperous, worldwide technology company sees its mission as not just making money for its investors but living harmoniously in the natural world and strengthening the broader community by supporting educational programs like Virginia Henderson's.

"Capitalism with a soul" is how Huffington Post recently described the Promega operation in a lengthy appreciation of its philosophy. Allen Dines, who works in UW-Madison's Office of Corporate Relations, put it another way: "Promega is the epitome of a 21st-century company."

Credit founder Bill Linton, whose fascination with life at the cellular level is matched by his curiosity over the meaning of life itself. François Ortalo-Magné, dean of UW-Madison's Wisconsin School of Business, puts Linton in the very top rank of business leaders he's met.

"They all share a passion for deep, long-term questions," says Ortalo-Magné. "It's beyond strategy. It's beyond operations. It's about what makes us unique as humans."

Not without his critics, Linton ranks with Epic's Judith Faulkner as Dane County's signature entrepreneur. And as with Faulkner at the privately held Epic, there are concerns what happens to Promega when Linton, 66, passes from the scene.

To which Linton's matter-of-fact reply is: He's working on a 100-year plan for Promega.

Selling picks and shovels

Many of us had an ah-hah moment in school when we read about the 1848 California gold rush. The surest way to riches wasn't joining the thousands of prospectors panning for gold in the California hills, but instead selling them picks and shovels. This was the genius of Bill Linton's plan for Promega, which he founded in 1978 at about the time biotechnology was exploding. He sold picks and shovels to the researchers -- the chemical reagents they used in their experiments.

Led by Stanford researchers Stanley Cohen and Norman Boyer, scientists began cutting up DNA molecules and splicing the fragments from more than one organism together. Among the life-saving products to emerge from recombinant DNA research was synthetic insulin.

Linton, who held undergraduate degrees in biochemistry and biology from the University of California-Berkeley, moved from the East Coast to Madison to study pharmaceutical chemistry. His parents were the children of Far East missionaries. "From them I learned to appreciate cultures in other countries and to understand the concepts of service and stewardship," he notes.

Linton's father was an engineer and businessman. One of Linton's earliest memories was watching his dad carefully take apart and put together car engines. "I played with [his] tools, and I would look at how stuff was put together," Linton wrote in an autobiographical sketch for the American Chemical Society.

Though he lacked any business training, Linton launched his own "tool and techniques" business, which provided the restriction enzymes that genetic engineers used to cut DNA. "For many years the only kind of biotech companies that prospered here were like Promega -- tool and techniques companies," says Dines, who came to Madison as part of that first wave of biotech innovators. "That's because you could fairly easily commercialize a product. You didn't need tens of millions of dollars in venture capital. Those therapeutic discoveries might take 10 years, if you were lucky, to get to market."

Investor John Neis notes that Promega "got to revenue very quickly and became a going financial concern" because of its picks-and-shovels strategy.

Today, Promega has moved beyond the production of enzymes to offering more than 2,500 products used in protein analysis, genomics, genetic identity and drug discovery. Indeed, Promega's Maxwell 16 system, which is used in crime and paternity testing, has even been featured on the CBS drama CSI: Miami.

Still privately held with Linton as CEO, Promega operates globally from its longtime Fitchburg headquarters. It has distributors in 15 countries, sells products in 125 nations and has manufacturing plants in Korea and China as well as in California. But Fitchburg is home, employing around 700 of Promega's more than 1,200 employees. Annual revenues are put at $340 million.

His own guide

On Oct. 11, the usually reticent company will step into the spotlight when it opens the doors to a public presentation of its new 260,000-square-foot manufacturing plant called the Feynman Center. (Yes, named for the famous physicist Richard Feynman.) The public is invited to tour what's described as a state-of-the-art facility that has integrated design and sustainable building practices. The company expects to add another 100 employees over the next five years to accommodate the manufacture of federally regulated molecular biology products.

This is heartening news. But second-guessing has often shadowed Promega's growth. Brian Renk, head of the BioForward trade group, says the Madison biotech community always expected Linton to sell the business and reap his profits.

"But Bill is his own guide and a freethinker," says Renk. "He's always been independent."

Gutsy too. Promega battled pharm giant Roche for 13 years when the Swiss multinational filed suit in 1992 claiming Promega violated one of its patents for a popular DNA replication process. Reality check: Roche's annual revenue is 160 times larger than Promega's. "But Bill wasn't about to be bullied," says Neis. "This says a lot about the man's integrity."

The suit cost Promega "tens of million of dollars in legal fees," Linton admits. But to his thinking, Roche was throwing its weight around, and that wasn't right.

"The suit was simply a business strategy," he says, aimed at bludgeoning Promega to change the terms of an existing five-year license at year two. "They didn't want to wait three more years, so they used their massive legal team to change the terms."

It didn't work.

In 2005, Roche approached Promega about settling out of court. The terms were kept private, but a biotech trade publication speculated the settlement "could have cost the Swiss giant millions of dollars."

"We ended up achieving what we wanted," says Linton.

Ortalo-Magné says the 13-year suit sent an important signal to the other big players in the biotech world who might want to push Promega around: "They look at Linton and think, 'He's crazy! He could fight us for years, so let's stay away.'"

'A service to the community'

When the Promega-subsidized Woods Hollow Children's Center received a high-level accreditation for its childcare program, Bill Linton showed up for the celebration with cake and gift cards for the staff. "He recognizes hard work," says Teresa Hoveland, the center's executive director.

She tells the story of how Linton, when his children were young, built the center in 1991 on land he owned near Promega because he didn't want Promega staff worried about childcare. The company continues to subsidize the operation, even though only 15% of the enrollment (which averages 136 students) is Promega-related.

That subsidy -- from 18% to 20% of the operating budget -- keeps fees down and allows Woods Hollow to recruit top childcare workers. The center offers health and dental coverage, life insurance, long- and short-term disability, a 401(k) retirement plan with an employer match, regular raises, planning time and a longevity bonus.

"Our pay and benefit package is kind of unheard of in the childcare world," Hoveland says.

Woods Hollow is just one aspect of Linton's expansive view of community involvement. He and his wife, Mary, pledged $1 million to build Fitchburg's community library even before the $14.5 million project was approved by the voters and the city council.

Linton, whose principle residence is in Fitchburg, has also been deeply involved in his development plan for his 400-acre Fitchburg Center, which is home to the Promega complex, other tech companies like Bruker AXS, CDW and Terso Solutions, and the Fitchburg City Hall. The tract, which he owns separately from Promega, has never turned into the Fitchburg downtown Linton originally envisioned, but has become a crucial element in Fitchburg's emerging identity as a new city that grew out of an old township.

"They take a visionary approach to development," Mike Zimmerman, Fitchburg's economic development director, says of Linton's team. "They're not just looking to sell and build as fast they can. They want to build for the long term and be sustainable."

Linton's leadership, says Mayor Sean Pfaff, "has put Fitchburg on the map."

Hold-tight philosophy

Linton rejected the usual script for tech startups. He neither sold Promega to a coastal biotech behemoth nor turned to the stock market to raise capital. Both options would have almost certainly produced a huge payday for Linton and his investors, but at the expense of his losing unfettered control of the company.

His hold-tight philosophy, skeptics say, has dearly cost his investors, who haven't been able to walk away from the table with their handsome profits in hand. Had they been able to cash out early on, they might have reinvested in new Madison tech companies and perhaps produced even more wealth.

Neis, whose venture capital company made its second investment in the young Promega, says the experience had its pros and cons. Picking a big winner early on bolstered Venture Investors' profile and proved very profitable in the long run. But it took "20 years, two weeks" for Venture Investors to sell its stake. "As a fund, this was an awfully long time," he says. "We didn't get the liquidity pop we hoped for."

A critic who asked to remain anonymous says Linton reflects the small-town insularity that holds Madison back. The Madison view is that, "We can be off the grid. We can do it our way. Going public is bad. We can grow from within."

California-based Life Technologies is a point of comparison. Once known as Invitrogen, Life Tech has roots in Madison through its purchase of PanVera, another biochemical company founded by Promega expats.

Like Promega, Life Tech does genetic testing and sells reagents to researchers, and once was the size of Promega. But the publicly traded firm followed an aggressive strategy of buying other tech companies. In May, biotech supplies leader Thermo Fischer announced the purchase of Life Technologies for a whopping $13.6 billion. The unanswered question: Could Promega have become another Life Technologies, but in Dane County?

Such ongoing consolidation in biotech is a threat to Promega, notes an industry observer. Promega may not be large enough to survive in a maturing industry where its competitors grow bigger and bigger.

Still, even skeptics acknowledge that the Madison area hasn't always fared well when local biotech firms play by Silicon Valley rules. So many of those firms moved to the coast or shut down after their local owners sold and made their big scores.

Neis says these sad fates could have awaited Promega had Linton followed the usual entrepreneurial game plan. "Who knows if Promega would still be in Madison at the scale it is had Bill decided to go public," he says.

Sense of quality

Linton's business thinking is stunningly different. When I asked him in an interview if his company's bottom line (and his investors' wallets) didn't suffer for its costly worker-friendly policies and Promega's community outreach, he launched into a disquisition on the nature of capitalism and money that old-school business leaders might find appalling.

He has disdain for American corporations that are busy stockpiling cash. "What good is that?" he asks. "Money only has value when you apply it to something that creates stuff. You could have a million dollars stuck in your back pocket, but if you never took it out and did anything with it, it's worthless. It's just paper."

Then he poses a rhetorical question: "Is the whole purpose of a business the total return it gives investors?" Clearly he thinks not. The "real constituents" of the business, he argues, are its customers, workers and the broader community.

Linton has well-developed thoughts on this issue, and they inform Promega's operation from stem to stern. Linton wants creative people working for him. He wants curiosity to be their guiding light. And he wants Promega to exude quality and smart thinking that both his customers and staff can see and experience.

So Promega has hired topnotch architects, designed its space to stress natural lighting and built "third spaces" in his buildings where his staff can meet informally to brainstorm. He has employee gyms. A nurse practitioner is on duty to deal with health issues. Zen and meditation classes are offered onsite. The subsidized cafeteria features local food and has its own garden. The company art consultant curates shows that are hung in the BioPharmaceutical Center. Twenty-five acres of restored prairie are crisscrossed with hiking trails.

Traditional businesses are more concerned about building "the most cost-effective cubicle" for their employees, he says. Their attitude: "It's only a job. If they don't like it, they can leave. Why should we make their cubicle anything more than just a place to work?'"

In contrast, Linton wants Promega's buildings to be "a delight and surprise to everybody who touches this organization." He wants spaces that "are put together in ways that are pleasing and artistic and that show a tremendous attention to craftsmanship and detail."

Do that, he says, and your customers will naturally assume "that you have the same exacting mindset in how you design, build, package, ship and support your products.

"You infuse that sense of quality in everyone who steps in the door their first day of work. This is just as true of maintenance as it is of research and development. You want the experience of quality to become part of the social fabric."

This is heady stuff, but not everyone buys in. The job boards show anonymous gripes about the pay at Promega and the tight control that Linton's management team allegedly exert over the company. Also, the departure 20 years ago of Ralph Kauten and several other top executives, who went on to start PanVera and other life science companies, suggests that not all are enamored of Linton's stewardship.

Kauten says he didn't like Linton's embrace of a top-down management style, and while the two men "were once the best of friends," they no longer talk.

Linton says he has no hard feelings. "I'd be happy to have dinner with Ralph at any time," he says, adding that he's proud of the success of the former Promega execs. He notes, though, that it was difficult for the two men to talk after Kauten left because his new business was "strongly competing with Promega."

Next steps

Linton is unperturbed when asked about succession. "Annually I work with the board on who would take over. We have a lot of details on how the business would operate, because I could die tomorrow of a heart attack," he says. "What's important to me is that we have a structure -- and we're still working on it -- that will enable this company to celebrate its 100-year anniversary as a private company, as an independent company.

"We only have 65 years to go," he says with a hint of humor.

But the notion of a 100-year business plan seems preposterous. Most business plans run five years, maybe up to 10 years, and are regularly updated. Beyond that, the conventional wisdom is that there are way too many variables to plan for anything with certainty.

Ortalo-Magné, who meets regularly with Linton, saw him raise the issue to a small group of business notables: What could he do today so that Promega will have a successful 100-year anniversary? There were snickers. "For some people around the table it was, 'Yeah, right, that's goofy Bill again.'

"But it's a very profound question," says the UW dean. "'What can I set up so this company will last beyond the lives of the people who run it today?' Some companies have done that."

Ortalo-Magné points out that Procter & Gamble, a soap maker that evolved into the consumer-goods giant, has been around for 176 years. In Wisconsin, the Manitowoc Corp., founded in 1902, has morphed from shipbuilding into the crane and commercial refrigeration businesses.

"We've talked about what makes a firm successful over the very, very long term -- even beyond 100 years," he notes. "So the question is, could Promega sustain the same long-term outcomes by setting up a trust that creates an enterprise with an enduring life like P&G and Manitowoc?"

Ortalo-Magné offers no answer, but given his high regard for Linton it seems clear that he suspects Promega could pull it off. For Linton, the question seems absolutely crucial, due to his core belief that "a business enterprise can be far more than a bunch of numbers that create a bottom line."

As he told The Huffington Post: "Businesses have an opportunity, just like people, to say, 'What are we here for?'"

[Editor's note: The name of the BioPharmaceutical Technology Center Institute was corrected. The article was also updated with additional comments by Bill Linton.]