Apple’s ubiquitous touchscreen? The technology behind it was developed by a Newark, Del.-based company called FingerWorks that Apple bought in 2005.
But before Apple could buy it, FingerWorks needed a management team. Enter Jeff White, a longtime Hewlett-Packard guy who spent some time running a biotherapeutics company he eventually sold. White, who lived in Chadds Ford, Pa. during his time at FingerWorks and still resides there, met the FingerWorks team at an angel venture fair at the Union League in Philly, and the rest? Well, keep reading — he tells the story better than we can.
White declined to give an exact amount of the price Apple paid for FingerWorks but said that the company’s stock grew 20 times its value after the sale, “so the return was very significant.” The engineering cofounders of the company, John Elias and Wayne Westerman, took senior engineering jobs with Apple, which enveloped the Fingerworks brand.
White, 50, said he’s eyeing his next venture, a company in the media space, though nothing is certain yet. He also cofounded Trestle Ventures, an early stage investment fund based in West Chester, Pa.
We caught up with White to hear more about the big acquisition (White said he didn’t speak about it for a few years after because Apple issued a gag order on the sale), what it was like working with the tech giant and what he thinks Philly’s tech scene needs in order to flourish.
As always, edited and condensed for clarity.
Tell us how you got hooked up with FingerWorks.
It was in early 2000, and I had just sold a [35-person, Delaware-based] biotherapeutics company. When we sold, I had a pretty good sense of how that world worked. I knew I wanted to do another startup. I wanted to go deeper into earlier stage where I could get more skin in the game.
I went to an angel venture fair at the Union League in Philadelphia and noticed one company in the corner. They weren’t on the agenda to speak at the event because they had been a last-minute addition. It was FingerWorks.
And I said, “What do you guys do?” And they said, “We have this keyboard here that runs off my laptop.” So I said, “Show me what you have.” He put his hand on his laptop and right away, I got it.
Meaning, the potential of new device interactions?
I had spent more than 10 years on the peripheral side [at HP] so I understood a lot about keyboards, monitors and storage. Right away I got the impact of what they were doing, how breakthrough it was.
I said, “Frank [Lytle, FingerWorks’ sales head], this is pretty interesting. Have you actually built any of these?” And he said, “We’ve probably built 1,500 and sold them.” I knew right away — you want to see certain milestones with a company: do you have a product that works, have you sold it, have you gotten feedback from your customers. If someone wants to pay you money for it, that’s a big deal. I don’t care how much it is. At the time, the FingerWorks team was two engineers and this part-time sales guy.
So I met with the engineers, and they said, “We’re looking for investment.” And I said, “With all due respect, you don’t have a management team. You don’t have any business training.” I told them, “If you can find a management team, I’ll help you raise the rest of the money.”
They called me up the next day and said, “You happened to mention that you sold your company, why don’t you come and run our company?” And [after some convincing], I said, “Make me a cofounder and give me founder equity, and I’ll work the way you guys do: I won’t take take a salary.”
It was the best decision I ever made.
So how did you get involved with Apple?
Wayne [Westerman, one of the FingerWorks engineers] had carpal tunnel syndrome, so [the technology was originally meant] to help people with hand disabilities. Wayne had a very lofty and admirable goal: I just want to see it on as many systems as possible and make some money on it.
So I said, “If we sold the company in a year, you’d be OK with that?” And they were. From Day 1, that was our goal.
Your best acquirers are the ones who know you the best, the ones who have a business relationship with you. So we started working with all these companies: IBM was interested, Microsoft was interested, NEC, Apple.
Apple was very interested in it. They wanted to use it for their trackpad on their Macs. Once they accepted they were going to use it, [our technology] got lots of visibility inside of Apple. They realized that was what they wanted for the iPhone. It turned from a licensing deal to an acquisition deal pretty quickly. The whole process took about eight months.
Were there any light bulb moments when you realized how far the technology was going to go?
There was one meeting I had with the VP of Procurement. Apple had just launched the first iPod, and I asked him, “how many of these iPods do you think you’re gonna sell?” Like, “How big do you think this can be?”
And he said, “Remember the Sony Walkman? It’s gonna be bigger than the Walkman.” And I said, “You’re crazy.” Sony sold 30, 40, 50 million Walkmans a year.
At that point, I realized they had a pretty big, bold vision.
What do you think Philly’s tech scene needs in order to grow?
It needs some companies to be very successful here, that get to a big enough scale where people leave to start their own companies.
Yeah, if you look at the Bay Area, that was key. When I was at HP, the guy I worked for, he was chairman of the board. Three of the four engineers that worked for him all went on to start billion dollar companies. Silicon Valley was started by HP. They were the original company. Now you see people leaving Apple, people leave Google, even Facebook, even though it’s still a young company. You’ve got to have some companies that have that kind of mentality, and that hasn’t happened in Philly. But it’s starting to. There’s Comcast and SAP and quite a bit of healthcare companies.
You also need a strong university system where students have the ability to start their own ideas. That was the problem with Philadelphia for years: great universities but no tech transfer.
And the last thing you need is capital. People willing to invest. The money comes from entrepreneurs who have been successful. It’s not people from a Fortune 500 company who have a nice 401k because they don’t understand that world. It’s too foreign to them. You need other entrepreneurs. Everyone talks about venture capital, but the best venture capitalists are the ones who have done it themselves. Look at Josh Kopelman. His big advantage as an individual is that he’s done it.
I think we’re on the path there. People say there’s no wealth here but that’s just flat out wrong. But the wealth in Philadelphia is old money — that money wasn’t made in technology and it wasn’t made by entrepreneurs.