Gordon Kuenster, one of the first successful tech entrepreneurs in the Seattle area, died recently at the age of 80. His story is worth telling because of his importance in helping to launch our local tech economy.
In 1976, Kuenster resigned his mid-level executive job at Boeing to become the CEO of a floundering local company that had a obtained a license from the UW Medical School to develop and sell the first commercial ultrasound machine for medical diagnostics, Advanced Technology Laboratories (ATL).
Don Baker at the UW Medical School had developed this technology and served as an important technology contributor to ATL as it grew its products. ATL had received initial equity funding from local angels Sam Stroum and Howard Suskin but was out of money and disorganized in its efforts.
At the time there were only a handful of even modestly successful tech companies in the Seattle area, including John Fluke Manufacturing, PhysioControl, Heath Techna, Intermec and Data I/O. Microsoft was founded in 1975 but did not go public until 1986. There were no local venture funds.
Kuenster took charge of ATL, bringing needed executive leadership, and successfully raised necessary capital, including from an East Coast group of angels that included Fred Adler who had been the original investor in Data General, one of the early mini-computer companies located on Route 128 outside Boston.
I lived through Kuenster’s and ATL’s struggles and growth because as a young lawyer at Perkins Coie I was able to convince the firm to represent this speculative new company. Our first task was to help them raise additional equity funding and I remember vividly riding in the back of a taxi to SeaTac with Fred Adler as he wrote and handed me a personal check for $100,000 and told me to send him the legal documents. An angel investor at his best.
ATL’s products quickly matured and found a market at major hospitals as a device safely providing a video of the carotid arteries and, wonders of wonders, the living fetus in pregnant women. I was always convinced that being able to show expectant parents a live video of their unborn child and its sex was a more effective marketing tool than explaining that lives might be saved by diagnosing potential stoke victims.
After a few brief years of rapid revenue growth and while interviewing investment bankers about a possible IPO, Kuenster decided to sell ATL to Squibb for $60 million. Not a lot by today’s standards, but in 1979 this was considerable. For example, in 1970, Intel had raised only $6.8 million in its initial public offering. A $50 million venture fund was considered large.
ATL continues today as a technology leader in medical ultrasound products as a division of Phillips’ Medical Systems. ATL and PhysioControl were key forerunners of our current robust healthcare ecosystem in the Seattle area.
The ATL profits earned by Kuenster and the local investors — including my small investment — provided startup capital for several new companies, including Seattle Silicon. In 1983, Kuenster founded Seattle Silicon along with two Boeing engineers who had been developing techniques at Boeing for designing silicon chips more efficiently and quickly than existing techniques in the marketplace. The engineers had been students of Carver Mead, one of the intellectual leaders of chip design, and decided to leave Boeing when it cancelled its semiconductor design program. Innovation was rapid at Seattle Silicon, but also at California firms such as Silicon Compilers and VLSI Technologies.
If Seattle Silicon had not ultimately lost out in the competitive battles or if Boeing had not abandoned its own semiconductor programs, Seattle might have grown into a major semiconductor center.
In succeeding years, Kuenster was involved as a founder and investor in a number of additional companies including as founder and CEO of Virtual Vision, which in 1991, funded by Paul Allen, developed and briefly manufactured goggles that served as a display screen for TV videos and PC displays, a concept years ahead of the technologies needed to make usable devices and only now becoming a reality with Google glasses. At its peak, Virtual Vision had 144 employees.
Over many years, Kuenster was a mentor to numerous entrepreneurs, such as Peter van Oppen, who went on to be very important contributors to the Seattle tech ecosystem. Employees of Kuenster’s companies also have populated many of the startups in the Pacific Northwest.
The Northwest tech industry of today certainly owes Gordon a lot.
A memorial service is planned for May 30 at the Rainier Club in Seattle.
Tom Alberg is a founding partner of Madrona Ventue Group, a Seattle venture capital firm.