Published originally in Vol. 3, No. 10, April 1984 of the Grass Valley Employee Newsletter ‘Channels’

How It All Began
By Dr. D.G.C. Hare

About 1955 Sangamo Electric Company bought out the D G C Hare Company of New Canaan, Connecticut, a company which I had started about 1949. The Hare Company was moved to Sangamo’s home office of Springfield, Illinois, and one of the conditions of sale was that I set up a research laboratory for Sangamo, anywhere I wished.

Having been born and raised in California and being well aware of the charms of the western slopes of the Sierras, I soon thought of Grass Valley where a friend of mine from Stanford, Charles Litton, had set up an R&D (research and development) firm of his own after selling his company to what became Litton Industries.

After a trip to Grass Valley in 1958, I rented a wing of Charlie’s building - a hospital started in WWII and never completed (now Litton Engineering).

About half a dozen Hare Company employees had come out to Grass Valley with me and after dickering with Sangamo and buying some of the Hare Company equipment in Grass Valley, I decided to set up another company.

Thus born was The Grass Valley Group in the spring of 1959. The Group had $12,500 in cash, the equipment purchased from Sangamo, an excellent mechanical engineer, an excellent machinist, a couple of good electronics engineers, and absolutely no business of any kind.

The Hare company had built a lot of audio equipment for Cinerama Inc., the 3D motion picture outfit then in its heyday. A call to them turned up the fact that they were planning eight new theaters and GVG landed an order for $400,000 worth of audio gear.

Bill Rorden, who was definitely the key man in the success of GVG, had been lured away from Varian Associates - I don’t know how - about this time. The Cinerama job was finished in a year with an after-tax profit, as I recall, an incredible $120,000. Flushed with this success, we bought the 80 acres along Bitney Springs Road and put up Building One. The land was offered to us at $500 an acre but had no road frontage, so I bought three acres of frontage from another party and let the word out I was planning a chicken ranch. So we go the 80 acres, as I recall, for between $200 and $300 an acre.

Also interesting is that Building One, a very pleasant one in appearance, designed by a well known Peninsula architect and containing over 4,000 square feet of functional space, cost less than $40,000. Of course, Bill Rorden and I did all the electrical wiring - or should I say Bill did most of it.

So there we were-a new company with a new home on 80 pleasantly wooded acres and once again with no business at all. No products, no customers, not too many bright ideas - but a lot of optimism - if you can call it that.

We did get an R&D contract with Sangamo which paid about $50,000 a year for a couple of years, we did some work for the State Department and starting about 1962 we began to sell some broadcast equipment to the broadcast industry. But the years between 1960 and 1964 were really bleak. I don’t recall what the income for 1961 was, but in 1962 our total income was around $80,000 with an operating loss of $15,000, while in 1963 our income was $95,000 with a loss of $20,000. By 1963 I had all my cash in the business and Bill Rorden had $20,000 of his.

In 1963 things began to pick up. We sold more audio equipment - the 610, 621, and 622 audio amplifiers and built some audio studio control equipment for a couple of stations. Bob Johnson joined us in the spring of that year and his first job was winding transformers for this audio equipment. But the audio field was - and I guess still is - a poor-boy’s turf, and we kept looking around.

Television kept coming up in our bull sessions and a call to Harry Jacobs, the chief engineer of KGO San Francisco, got him to come up and visit us (Harry had been one of the engineers in a lab I directed during WWII). He brought with him a video D.A. (distribution amplifier) made by some outfit in the Midwest. We took a look at it, asked Harry how much it cost, and when he told us $350 and that each station used a lot of them, our reaction was the hell with audio, we’re in the television business.
Herby Hartman, the chief engineer of Channel 3 in Sacramento, joined the Group in October of 1963. He, Bill Rorden, and I worked on the prototype of the 700 D.A. Herby went to New York early in 1964 and contacted CBS and ABC. Not too much came out of the CBS visit, but he spent a week or so with Hans Schmidt of ABC evaluating and analyzing the 700 prototype.

After Herby got back, he and Bill went to the NAB convention in Chicago where, since we were not affiliated with the National Association of Broadcasters, they set up what amounted to a booth in their hotel room, and lured up various broadcast engineers. We began to sell a few 700’s and 705’s, the later being a modification to the 700. By late April we had sold something like 50 of them.

Then came the real big break for GVG. Sometime in April I got a call from Harry Jacobs, KGO, an ABC affiliate, was to broadcast the Republican National Presidential Convention from the Cow Palace in South San Francisco. The supplier of some vitally needed video equipment had just told KGO they couldn't deliver on time (as I recall the deadline was the end of May). Harry told us if we could deliver 10 processing amplifiers and 30 D.A.s in a month, he would get us an order.

“What the hell is a processing amplifier?” Bill and I said simultaneously. Harry blithely explained that all it had to do was clean up and restore the video signal after its deterioration in wandering though the various parts of the studio. Well, Harry’s call was on Monday morning and that same Wednesday we called him and told him to come up and see the 711 Processing Amplifier. He couldn't make it until Friday, saw the gear, and we go the order! This, I think, was an all-time record for GVG and maybe for a lot of other firms.

The equipment worked perfectly and we began to develop new video items and finished up 1965 with sales of around $260,000 and for the first time in four years, a profit-an after tax net of about $27,000.

After the processing amplifier and D.A., the first two important additions to our line were the Synac and sync generator. It was with these four items that Hazel (Hare), Bill, and I attended, officially, the 1965 NAB Convention in Washington, D.C.

The resplendent booth we had was just big enough for the four items plus one of us-six-by-eight feet as I remember, and well-removed from much activity. But surprisingly enough, we attracted quite a few people, and when we got back home the orders began to come in. At that time we had no sales force at all and it was generally the case of the customer calling us, not we them.

Somewhere around this time we did two things that helped our image a lot. The first was deciding that, although we were more than competitive, we were charging too much for the sync generator. So we told all of our customers that we’d give them a credit - I've forgotten how much, $250 or $500-retroactively. At that time this was unheard-of in the video business.

Second, we guaranteed that all of our equipment would meet the original specs for two years, or we’d repair or replace it at no charge. We had one case in which a field crew truck covering a golf tournament was hit by lightning. The equipment – nearly all ours – was ruined, and I was asked what we would charge for replacing it. We replaced it period, without charge. Word of this got around fast and did us no harm.
1965 was a good year. We nearly doubled our sales and did double our after-tax profit to $400,000 and $58,000. But in 1966 we more than doubled our sales to $930,000 and quadrupled our after tax profit to $230,000!

Our product line had continued to grow and in early 1967 we had over 70 different items for sale. This can be grouped into seven categories:

  1. Video and pulse distribution amplifiers – ten varieties
  2. Sync generator – two basic models
  3. The Synac
  4. Mixers – two models
  5. Processing amplifiers – three models
  6. Insert keyer
  7. Vertical aperture equalizer

 

1967 was a most eventful year. Our growth since 1963 had been little less than phenomenal and the orders were increasing all the time. The subject of going public naturally kept coming up in our discussions and meetings, but with no positive results.

In the summer of 1967, Hazel and I took a few days off and drover up to the San Juan Islands in Vancouver Strait. We visited a television transmitter on Orcas Island and on the way back to the hotel I came  to the decision to go public. I called our treasurer, Bob Robertson in Grass Valley, and that was that. 200,000 shares of Grass Valley Group stock were offered to the public in December of 1967.  Our sales for 1967 were about $1,400,000 with an after-tax profit of $380,000.

In March of 1968 Jim Ward, one of Arthur Young’s accountants, who worked up our first prospectus, joined us, replacing Bob Robertson, who left because of his health. Jim became treasurer about a year later.

Early in 1968 we got into the switcher and special effects field, a field which proved very profitable. Our sales for 1968 were over $2 million and our after-tax profit nearly $.5 million – a sales increase of nearly ten times in just four years and a profit increase of nearly twenty times in the same period.

In February of 1969, Hazel and I each sold 100,000 shares of stock in a second public offering. Then sometime in the next year or so the stock went from over-the-counter to the American Stock Exchange.

The years from 1968 on were very good for the Group, even if percentage wise they weren't as spectacular as the previous five – they just couldn't be.

In 1969 we got our first really big order – over $500,000 – for a routing switcher for the ABC headquarters in New York City. Two things stand out in my memory about this deal. First, after Bill Rorden had gotten the details and specs and had talked to the ABC people and worked up a plan of action, we met with Jules Barnathan in Grass Valley. Jules was (and I guess still is) vice president in charge of engineering for ABC. Our meeting lasted maybe a half hour or a little more. I told Julie what we proposed to do, he said it sounded good, and we shook hands - no contract, no written specs, just our reputation, and theirs.

The second thing is that the switcher was installed in 1970 and the only time it has been down in the thirteen years since is when Con Edison turned off all of New York City.

In 1973 we had a sales of something over $5 million and a profit of around $1.2 million – I can’t believe it at this point. Sometime in the spring of that year a couple of guys from Tektronix came down to see us and talk over the possibility of a merger. In July of that year, Hazel and I flew up to Beaverton and spent some time.

In October of 1973 Jim Ward, Hazel, a couple of others, and I again flew up to Tek and we settled on a price for GVG stock in terms of Tek stock. The papers were formally signed in 1974, and a couple of months later Hazel and I moved to Phoenix.

(Editor’s note: Dr. Hare emphasizes that a lot of very important people to GVG weren’t mentioned here – Ken Bauer, Bob Cobler, Jerry Sakai, Birney Dayton, Merv Graham, a lot of women on the assembly line and in the office, and many more.)