11.  Do your accounts, financially engineer, and structure contracts

Carlson then came on board as a consultant to Haloid in 1948 on a fee of $US1,000 a month. The way Carlson used his new income is instructive as regards its future impact on Carlson's earnings. Rather than spending the money on luxuries, Carlson sent much of it to the Battelle Memorial Institute.

The reason for this is that his agency agreement with the institute had originally entitled him to 40 per cent of all its revenues from his invention. Once Battelle's total research expenditure reached $US10,000 Carlson's royalty rate fell by one per cent for each $US1,000 that Battelle spent, until the rate had reached the contractual minimum of 25 per cent, below which it could not fall. The Carlson-institute agreement gave Carlson the option of restoring his original royalty rate by reimbursing Battelle, within five years, for half of its spending beyond the original $US10,000. That five year period was now drawing to a close, and Battelle so far had spent $US40,000 - meaning that Carlson could restore his 40 per cent royalty for $US15,000, or $US1,000 for each percentage point.

Owen writes at page 143 that:

• "This would ultimately turn out to be an extraordinaryily lucrative investment, since by the mid-1960s each point would be worth millions of dollars. In 1948, though, putting more money into electrophotography seemed recklessly speculative to almost everyone but Carlson - who had just received his first royalty payment ever, a cheque for $2,500, representing a quarter of Haloid's first payment to Battelle. He sent that money back to the institute and, exhausted his own savings and sold $US100 shares in an 'Electrophotography Participation Fund' to 13 relatives, including several of his in-laws - all of whom would become millionaires as a result.'  

12.  Register trade marks

Some light at the end of the research tunnel had appeared back in 1948. A product seemed to be emering. The view was that the process needed a better or more customer-friendly name than electrophotography.

"Xerography", the word that stuck, was mentioned by a university academic. It comes from the Greek words xeros (meaning "dry") and graphein (meaning "writing"). Carlson's investor was Haloid Corporation (established in 1906, the same year Carlson was born), and now led by Joseph C. Wilson. Wilson had always liked the name "Kodak". Kodak, like Haloid, was based in Rochester, New York and they had been competitors to some degree. Xerox seemed to have similar qualities to the "Kodak" name. A trade mark application for the Xerox name was first filed in 1948 with the intention of using it in the product name. In time Haloid was renamed Xerox Corporation.

Haloid Model A

13. Ship knowing the first version may not be enough to make money

It was only in 1949 that the first xerographic copier, the Model A (see accompanying photo), was introduced by Haloid which had stuck by Carlson through years of substantial investment for a company the size of Haloid.

But Model A was not a roaring success. Owen writes at page 151 that 'The Model A might have disappeared and taken Haloid with it had it not been useful at doing something other than making copies. That something was creating paper masters for offset lithographic printing presses.' One version of the Model A was renamed the "Lith-Master" and revenues from it passed the $US2 million mark by 1953. That kept Haloid afloat to finance further research leading to the Xerox 914's release nearly a decade later.

In his journal in 1953 and 1954 wrote: "May leave Battelle & Haloid... Haloid has an asset which is slipping thru its fingers... Battelle never shown awareness... Heartbreaking to me."