CoMedical: Innovation, Entrepreneurship, and Family Support
ENTERPRISE – FALL 1992, VOL. 15, NO. 1
University of Washington – School of Business Administration
Getting fired, for whatever reason is usually such a traumatic and unnerving event that the hapless employee resolves to never let it happen again and to never mention his misfortune to anyone. Not Doug Overturf (BA 1968). The 47 year old president and founder of CoMedical, a Seattle based medical surgical marketing and sales group, states that his firings not one, but two convinced him to start his own company.
“There are people who belong in big corporations and there are those of us who don’t”, he said. “In some companies, managers want to control your every action or insist that you give them respect simply because of the position they hold. I’m just not good in that environment. I believe that you hire competent sales people, give them your support, and leave them alone to do their jobs.”
Overturf explained that although he considered heading out on his own after he lost his first job, it wasn’t until his second dismissal, at age 36, that he and his wife Judee really sat down and discussed the possibility. “I knew I could find a job to pay the bills, but that’s not much of a life.” he said. “Judee told me that she didn’t think I could work for anyone, because I’d just get fired again. I had no alternative but to start CoMedical.”
Total Trust in a Maverick
Doug Overtuf, a fourth-generation Washingtonian, was born on V-E Day in Seattle and attended local schools and community colleges before applying to the University of Washington. He was the first in his family to pursue a degree, and he recalled that, although he received unflagging encouragement from his grandmother, parents, and wife, his classes were a real struggle. Good grades took a backseat to a floor orderly job at University Hospital, and it was there that Overturf found his calling.
“I discovered that I loved working in hospitals,” he said. “I saw wonderful things take place, and a few tragedies as well, but when it came time for me to interview and choose between the two companies that interested me most American Hospital Supply and Xerox I decided to combine my business experience with my hospital experience. Luckily, American offered me a sales job.”
Overturf was hired in April, graduated in June, and left Seattle in July to attend a one-month training session in Chicago. “My first manager a great guy”, he said. “He handed me a catalog, a sample case, and my list of hospitals, told me how much business I had in my territory, and instructed me not to lose any. That was it. He had total trust in me. I couldn’t have worked for a better health-care company at that time.”
But times change, small friendly companies get bought up by disciplined corporations, and tolerant managers are replaced with by-the-book finance officers, who don’t always appreciate the mavericks on their sales staff. “I wasn’t quite 30,” Overtuf said, “when they fired me. It was a real shock.” With a young family to support, he immediately accepted a job offer from a hospital supply firm that was an awful company. “I went from the absolute best company in the industry to the absolute worst. But it was challenging: we had the opportunity to turn customer acceptance around.” That freedom didn’t last long, however, and Overturf once again found himself at odds with corporate America.
Innovation versus Risk
CoMedical was created in December 1981, and Overturf and his partner Dan Cox decided that their close contacts with buyers in Northwest hospitals would enable them to specialize in marketing the innovative medical items produced by start-up manufacturers. Their first few months were lean, and the partnership was in the process of dissolving when Overturf received a telephone call from a long-time customer.
“He told me about this new product he’d seen a real breakthrough in IV technology.” Overturf said. “The manufacturer was brand-new, with this remarkable controlled delivery system that they didn’t know how to market. They were looking for distributors, but they wanted me to buy $50,000 worth of their product first. So Judee and I went to the bank, put up our house as collateral, and borrowed the money at 22 percent interest. Although I wonder now about starting a business under such conditions, I still remember how much I liked the whole concept of having to go out there and create a new market for this product.” Within months of receiving a UPS shipment that filled the Overturf’s basement, family room, and garage, CoMedical won the manufacturer’s award for the most product sold and the most accounts created.
Unfortunately, the success of the new IV delivery system was short-lived, and Overturf discovered, during one alarming phone conversation, the tremendous risk and seriousness inherent in marketing “revolutionary” products. A CoMedical customer at a hospital that was using one of the systems called, saying, “Doug, I think we’ve killed someone.” Overturf recalled his horror: “The product-through a combination of manufacturer and user error had malfunctioned on a heart patient. I immediately called the manufacturer, who asked me to keep it quiet. I was astounded. What about the patient? What about my customers, the people I cared about, people I’d worked with, people who trusted me enough to buy this product? And the manufacturer wanted me to just forget it?”
Although the patient recovered and the manufacturer finally threw out the first version of the product and reissued a second IV system with built in safeguards, Overturf cites the episode as a major turning point in his approach to business and his commitment to patient care. “We could have decided to offer only the tried and true products that aren’t so risky,” he said. “But I wanted the conceptual products, the ones that we would have to find new customers for. What I had to do was examine each prospective manufacturer, look at the commitment of the people involved in the company, and depend on my intuition. If the venture capitalists who drive the company are looking for a quick return before selling out, we don’t generally get involved. If I don’t feel comfortable with the manufacturer, the people at the top, or the product testing, we bail out. And there have been times when bailing out has cost a pretty good chunk of money.”
Another of Overturf’s basic premises is that CoMedical is not a product-oriented company. “We’re a customer oriented firm.” He said. “My philosophy is that manufacturers come and go all the time, and product cycles peak and die as quickly as new technologies come along. Another manufacturer can out-innovate you within a few years, even if you’ve got a great product. But through it all, our customers stay with us because they have confidence in CoMedical. They have our assurance that they’ll receive the in-service training they need or that they can get products on a Saturday if that’s when they need them. Trust is a big part of the products we sell.”
His customer’s confidence in CoMedical has led to steady 20 percent per year sales growth (in 1992, sales will total more than $4 million), and the firm’s expansion into Eastern Washington, Oregon, Idaho, Montana and Alaska. Their first $10,000 sales month was thrilling. Overturf said, as was that $50,000 month. When the numbers hit $100,000, he took everyone out for dinner, but was a little disappointed to realize that he still didn’t have a lot of spare cash. “Every time we’d get a big check in from an equipment sale,” he said, “we’d put the money back into the business. WE moved into a bigger building, hired additional sales associates, bought computers and copy machines, and used the rest of the money to seek out and invest in new products.”
Over the years, CoMedical’s inventory has contained such innovations as infrared thermometers that can take a patient’s temperature in two seconds, containers that protect hospital personnel from the needle pricks that could lead to hepatitis or AIDS, portable patient monitors that weigh less than six pounds, catheters, with two-way valves that can both infuse and aspirate fluids and polyethylene warming blankets that can dramatically minimize a patient’s postoperative heat loss. With an abundance of products, the company has been able to maintain its entrepreneurial independence and avoid being identified with any specific item or manufacturer. “What’s amazing,” Overturf stated, “is that, considering all the product lines we’ve added and lost over the years, we’ve never had a drop in annual sales.”
New Ways to Grow
People who have their own companies, Overturf said, often don’t realize how much money, time, and effort they’re expending on their firm. During CoMedical’s first few years, he was sleeping four hours a night, working seven days a week, calling on every family member who could unload a box from a truck, and “losing all sense of proportion and perspective.” After several speeding tickets and a car accident, he hired his brother-in-law, Bill Beach, as operations manager. “Family support was the only way we could make CoMedical work,” Overturf explained. “In fact, I remember leaving the office one day when Judee, Bill, my mother and mother-in-law were down there, and I realized how fortunate I was to have five people working when I was paying for only two.”
As the company prospered, Overturf hired office and warehouse staff and sales associates. When his son Griff (BA 1991) joined CoMedical last year, Overturf relinquished-albeit reluctantly-his sales accounts. “I had to give up what I truly love, which is selling to customers,” he said “to learn how to be a manager and leader, and it’s the most traumatic thing I’ve ever done. But this is an entrepreneurial firm, and we’re constantly looking for new ways to grow and develop. My newest challenge is to explore the alternative site market, and we’re venturing into the areas of hypothermia in hospitals, pain management, and patient monitoring. CoMedical will continue to expand as long as we maintain our flexibility and our entrepreneurial approach.”