Chinese Checkers
As Originally Published in Inc. Magazine
Chinese Checkers
An entrepreneur dramatizes his business in novels and uses the royalties as capital for his next start-up.
From: Inc., Feb 1989 | By: Hal Plotkin
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These days, there’s no shortage of businesspeople trying to leverage their corporate success into best-selling books. Lewis Perdue is one of the few who has leveraged his books into successful businesses. He used the advance and royalties from one book — a business suspense novel called The Delphi Betrayal — as the venture capital for a Los Angeles wine distributorship. He then used his advance from the sequel, Zaibatsu, to launch a marketing firm. Through the marketing firm, he eventually cofounded Inex Technology International — and there hangs a true story of international suspense.
The story involves the sale to China of array processors, devices that mimic the power of a supercomputer at a fraction of the cost. The Chinese insist they want to use array processors to find oil, but the machines are so powerful that Richard Perle, former assistant secretary of defense for international security, feared they might pose a military threat if used instead for, say, antisubmarine warfare. So he mandated round-the-clock, on-site monitoring by U.S. vendors. Unfortunately, this condition added a recurring annual expense that could be twice as much as the cost of the hardware itself.
“We were pricing U.S. technology out of their market,” says Inex cofounder Jon Stout, who spent two years selling high-tech equipment in China for Perkin-Elmer Corp. “I just thought it was ironic. Here we have a technology that the rest of the world wants, but we can’t sell it.” Processors of this type, he notes, have been sitting unsold in U.S. warehouses for more than a decade.
Hoping to break the logjam, Stout teamed up with Perdue to form Inex. The start-up, based in Washington, D.C., has developed software that allows for remote monitoring of array processors, eliminating the need for on-site inspection. Late last year Inex won U.S. government approval to ship the first remotely monitored device to China National Offshore Oil Corp. “We think the Chinese market could be $4 million to $5 million per year,” says Stout.
Meanwhile, Perdue is looking forward to collecting royalties on Zaibatsu, which is finally in bookstores. And what will he do with the money? Probably start another business.
