The first successful high tech start-up to be conceived at Oak Ridge National Laboratory was neither encouraged nor nurtured by the Laboratory. In fact, one division director forbade his employees to invest.
It was 1960. Founders of Oak Ridge Technical Enterprises Corp., or ORTEC, started the nuclear detector company anyway and created a local success story that spawned a string of successful start-ups in its wake.
The product was silicon surface barrier detectors. In the late 1950s and early 1960s, the heyday of nuclear science, researchers in ORNL's Physics Division had developed the instrument to study charged particles from the atomic nucleus—alpha particles, protons, deuterons, tritons and heavier particles.
As word of the detector spread through ORNL's published work, scientists at universities and other centers of research began asking ORNL to supply them with the instruments. ORNL's leadership chose not to set up a production shop at the Laboratory to build the detectors, so local researchers decided to launch out on their own.
Starting a business based on technology from ORNL had never been done by scientists who also kept their day jobs, says Hal Schmitt, one of several ORTEC founders and an ORNL nuclear physicist, now retired.
"There was a kind of underlying attitude that said, in effect, any association by a scientific researcher with the business world was crass, and, basically, was to be avoided," Schmitt writes in The ORTEC Story, a history of the company. "A prevalent view of employment was that one belonged to ORNL and the Atomic Energy Commission, body and soul, twenty-four hours per day seven days per week."
Still, the prospect of starting a company excited Schmitt and about a half-dozen of his colleagues, all in their 30s, who had helped develop the instrument. They laid plans, raised $14,000 -- selling $500 worth of stock to 29 individuals, both inside at outside ORNL -- and, eventually, secured the permission of the Laboratory's senior leadership. Not everyone was happy with the decision. One division director forbade his employees from participating in the company, including buying its stock.
Still, the company flourished, surpassing its founders' demand projections and requiring ORTEC to quickly add full-time staff and bring on experienced management. In 1967, the company sold to EG&G for $26 million in stock. For their $500, founding investors received $150,000 in EG&G shares. At least one ORTEC manager became a millionaire.
Although most of the ORTEC founders stayed at ORNL, the company attracted researchers from the laboratory, among them electrical engineers Ron Nutt, Kelly Milam and Terry Douglass, who wrote his master's thesis one summer at ORNL.
Nutt, along with three other ORTEC employees went on to spin out positron emission tomography, or PET, technology from ORTEC, then owned by EG&G. The PET scanner was invented by Michael Phelps, professor and chair of the Department of Molecular and Medical Pharmacology at the University of California at Los Angeles. The ORTEC employees, who further developed the PET scanner, created CTI Molecular Imaging, a company that brought PET into mainstream diagnostic medical care. The company went public in 2002 for $182 million and sold last year for $1 billion to Siemens. CTI's founders have donated millions to the University of Tennessee and local foundations and one founder, Michael Crabtree, went on to create U.S. Internet,—which went public through acquisition and ultimately become part of Earthlink—and, his latest start-up, trucking technology company IdleAire.
As for ORTEC, the company still operates in Oak Ridge and has branched into various nuclear instruments now used not only by the research community but in emergency response and anti-terrorism efforts as well.
Schmitt said ORTEC came out of the lab because its founders felt they had no choice but to serve the research community by commercializing the detectors they'd helped to develop. What the ORTEC entrepreneurs did not anticipate, he said, is that by doing so they would create a model for entrepreneurship that Laboratory leaders no longer discourage but strive to repeat.—Larisa Brass
Web site provided by Oak Ridge National Laboratory's Communications and External Relations