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 November 5, 1999

OnStream president, CEO works seven days a week to turn profit for company

LONGMONT — Bill Beierwaltes started his first high-tech company with three fellow engineers from Hewlett-Packard Co. who invested $3,000 each and worked nights and weekends on their new venture.

His latest high-tech venture, OnStream Inc. of Longmont, is a spinoff from a leading multinational corporation, with an initial capitalization of $50 million and a cast of hundreds. Just two years old, it already is grabbing an international market share.

But there are several similarities between the two. Good ideas, innovative technology, forward vision and hard work. Colorado’s high-tech companies rarely stand still these days, and neither do entrepreneurs such as Beierwaltes, who as OnStream’s chairman and CEO is back working seven days a week again.

“If you think you’ve got a great formula and you can start it and put your feet up on the desk, then you better not start it to begin with, because it won’t happen that way,” Beierwaltes said.

“And then you have to keep improving it to get good profitability and good value and so forth, and none of that comes without high energy and high commitment,” he added. “It certainly doesn’t come with guarantees.”

There were no guarantees in 1972 when Beierwaltes and his partners started Colorado Time Systems, or later when he started Colorado Memory Systems, both of Loveland, or even now with OnStream.

The first two companies, however, evolved into enormous successes, and Beierwaltes is confident that OnStream will turn a profit by the end of the year and will be extremely successful, too.

Reaching profitability is a benchmark for Beierwaltes, not in a materialistic sense but as an indicator that a company is going to be successful.

“It takes the pressure off you,” he explained. “When you aren’t profitable, you don’t know if you’re going to be in business or out of business. You’re under a lot of pressure and a lot of stress.”

Beierwaltes, 56, grew up in Winnetka, Ill., a North Shore Chicago suburb. He received both math and engineering degrees from the University of Michigan in 1966, though he knew even then that both would be used only as foundations. He first came to Colorado as a Hewlett-Packard intern in 1964 and 1965 and joined HP full-time in 1966.

“They made me an offer that I couldn’t refuse, and I’m glad I took it,” he said. “Colorado’s a wonderful place to live.”

Beierwaltes worked for HP for nine years as a design and marketing engineer, but along the way, he received an MBA from Colorado State University and found his true calling as an entrepreneur.

“The MBA said to me that I was probably more of an entrepreneur than an engineer and that I’d really rather be on the business side rather than the engineering side,” he said. “Later on, I found out I actually could do both and have the best of both worlds.”

His first opportunity to work both sides of the fence came with Colorado Time Systems, which pioneered aquatic sports timing systems and went on to capture 95 percent of the world market. But like many new ventures, it struggled in its infancy.

Raising venture capital back in 1972 wasn’t easy, though Beierwaltes and his partners didn’t really appreciate how hard it was then.

“We thought that all we needed to do was throw a couple of bucks of our own into the pot,” he said. “There’s cash equity and there’s sweat equity, and we didn’t know the difference. We just put in sweat equity and hoped we would be all right. We knew we had to make it work.”

In time, however, Beierwaltes made “a pretty good return” on his initial $3,000 investment, and that provided him with seed capital for his next venture, Colorado Memory Systems, which pioneered tape backup systems for computers.

Colorado Memory Systems is a tremendous success story, a $10 million company that grew to a $200 million company with a 65 percent world market share by the time Beierwaltes sold it to HP in 1992.

His newest venture, safely through its birthing pains, is quickly becoming profitable and is on the verge of introducing products that could revolutionize home-video taping.

OnStream is a spinoff of Phillips Electronics of Eindhoven, The Netherlands, which is still a major shareholder of the privately held company. It is finding new uses for technology that Phillips initially developed to record music digitally with the same clarity as today’s CDs.

Phillips could never quite get the cost low enough for consumer electronics, so it tried to recoup its investment, applying the technology to computers. Enter Beierwaltes, who has reapplied the Phillips technology to computer backup uses and created a high-performance digital tape-recording system he insists is the best on the market.

Phillips recruited Beierwaltes out of retirement from Colorado Memory Systems, and Beierwaltes agreed to serve as chairman as long as he could still have a few days off each week. “Then one thing led to another, and I ended up becoming CEO and seven days a week,” he laughed.

OnStream is forging ahead not only with a variety of new computer backup systems — its first products were shipped in March — but also with development of new uses for the same basic technology. Electronic surveillance tape that could compress a month of continuous action into a single tape is one possible use or down the road a little farther, a high-capacity digital video-tape recorder.

“We’re talking about over time being able to record on the order of 2,000 movies on one cartridge,” Beierwaltes explained. “Think of this as a one-tape library system that allows you to play back anything at any time you like.”

In fact, OnStream mirrors Beierwaltes’ forecast for any successful high-tech business in today’s world — build on your own technology as well as the technological developments of others, develop new uses for the technology and rise above the competition through successful marketing.

“It’s hard to get your message above the noise,” he added. “So much new innovation is going on, it’s like everybody screaming at you. How do you scream a little bit louder, or how do you scream so people hear you when everybody else is screaming?”

LONGMONT — Bill Beierwaltes started his first high-tech company with three fellow engineers from Hewlett-Packard Co. who invested $3,000 each and worked nights and weekends on their new venture.

His latest high-tech venture, OnStream Inc. of Longmont, is a spinoff from a leading multinational corporation, with an initial capitalization of $50 million and a cast of hundreds. Just two years old, it already is grabbing an international market share.

But there are several similarities between the two. Good ideas, innovative technology, forward vision and hard work. Colorado’s high-tech companies rarely stand still these days, and neither do entrepreneurs such as Beierwaltes, who…

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