Chroma Technology: Jay Reichman, Founder

Samuel Edwards: What is today...? December 12th?

Jay Reichman: December 13th.

SE: Today is December 13th 2016, my name is Sam Edwards and I'm here with--

JR: Jay Reichman.

SE: Thank you Jay. And today we're at Chroma Technology and we'll be talking about his experience here as an employee owner and [as] one of the founders, the culture of employee ownership, structure and the history. So Jay, to start off with [do] you want to talk about what you were doing before even Omega, we can go back that far. However you want to introduce yourself.

JR: Okay well I'll go back to college that's maybe as far back because you know I ended up working at Omega Optical pretty much right out of college, basically 00:01:00my first job out of college and I'll talk about what led me, just briefly about what led me there. I went to Brown University and received a mechanical bachelor's in mechanical engineering there although for most of my time there I was sort of doing kind of more of a physics track but in addition to that I was also interested in things like intentional communities and I lived at a housing co-op like Brown Association of Cooperative Housing, BACH for short, which has three sort of hippie co-op houses. So I was always kind of interested in cooperatives to be as sort of a side thing, not that I thought that was really going to sort of end up working in an environment that became sure of what Chroma became but I did sort of have sort of a philosophical leaning towards cooperative work environments and living, cooperative living arrangements. I 00:02:00started Omega, working at Omega, in 1983, autumn of '83. Basically I was not looking for a job at Omega but I was just looking for a job in the area, decided I wanted to you know try to make it through the winter and sort of start you know living in Vermont where a family friendly friend, a good friend of mine was already living and [if] you go to Vermont in the Autumn it's hard to leave if you don't have anywhere else you have to go to. So basically a friend of his was working at Omega and [I] decided to stop by and it seemed like an interesting place and worth working at. It did have sort of almost like the coop kind of hippie feel to it which was sort of attracted a lot of interesting people 00:03:00working there, whom you've met a few. And so, the only, I mean that my ticket in with that I had used the spectrophotometer before in the science projects at school so you know I was probably one of the only new employees to actually have ever done anything even remotely like what was done there and that sort of basic physics understanding [of] what they were doing. The only position they had available within the shipping department so I started in the shipping department, turned out to be probably the best place you could possibly start in 00:04:00a place like that because in shipping department got a chance to see everything that was made you learn how to handle and clean the optics because we shipping involved also cleaning and packaging, labeling with a white fine point markers on the edges of filters and even measuring filters. So I pretty quickly became probably the go-to person for doing a sort of unusual spectral measurements of optics. And after a year, sort of gotten into the production and went off from there, moving more and more into production but that was a be good background way to introduce myself to the company, really sort of knew just about everything that was going on there in terms of product. Moving, fast forwarding to the time when Chroma started, I actually was planning to take a leave of 00:05:00absence at about that time after working on a project that Omega was doing for the Hubble Space Telescope. I decided I sort of wanted to have a break and just sort of see where I was at in terms of things of what I wanted to do. I actually stopped work at that time, under good relations basically with Omega but soon learned about what Paul and Dick were thinking of doing and it sounded like well I wasn't doing anything else that time, I wasn't, I didn't know I was coming back to Omega. Seemed like something that was worth giving a few years in 00:06:00helping them out while they started up. When I got back from a longer, a long vacation that summer, started up in June, whatever, so basically that's how I sort of got into Chroma at the time.

SE: So I'm actually kind of interested about the work you did with themselves Hubble Space Telescope because I've been hearing about for months and now we're finally here-- just briefly if you don't mind.

JR: Okay well, Omega got the contract, I don't know the details of how we landed a contract. David Marcus who was at Omega was probably the lead, sort of the project manager in terms of all the paperwork and I was ended up being sort of 00:07:00the science and engineering manager, the design engineer and such, working with the engineers at JPL (Jet Propulsion Laboratory) to sort of work out problems and sort of make sure they got what they needed. It was for what they call the wide field planetary camera two, which is the big color camera that does you know, which had sort of a whole filter set of individual filters, had some monochrome CCD imager, and if you use the filters and sequential imaging that those are combined to create the beautiful color images that you see, you know, in the magazines and everything. The telescope had, I'm not sure of the sequence, but it was it was not the first camera that was with pick one, it was the second camera, but it was destined for the first being install[ed] in the 00:08:00first servicing mission. That servicing mission ended up becoming famous as the one that installed the corrective optics to deal with the terrible mistake that was done where they were they perfectly polished the main mirror to a focus which was not the right focus although it was perfectly focused, it was the wrong focus, focal point and they ditched one of the four scientific, one of the four instruments that was in there to make room for the corrective optics. Fortunately they didn't ditch the WF (?) pic. All the images up to another servicing mission that had been several years ago was through the cameras and filters that we made, at least visible, the ones in visible.

SE: So getting back on track, I guess maybe talk about even the beginning of Chroma that you were a part of. From what I understand, it took about six months to develop the first project or product anyhow. So do you want to talk about the first six months to a year with Chroma?

JR: Yeah; well at Omega, I had done some work with one of the technologies, coating technology, called electron beam evaporation technology and has used for mostly for beam splitters and mirrors that are exposed coating that so they have, slightly more durability than other types of coding so I led the effort to build our electron being coding chamber. So it was a little bit different than some of the other sort of what we call the soft coding chambers for the 00:10:00precision filters, [which] Wim Probably led that sort of, led the work in terms of designing the interior and everything for that but I, sort of, my baby was system, Unit 1, which was the electron beam system. So I did a lot of the dichroic beam splitter work and also worked on you know, designing fluorescent filter sets, doing design work for the soft coding, so did a bunch of things, sort of did a mix, like everyone there, we didn't mix of things. I did a lot of 00:11:00customer, this sort of application scientists for you know for working with customers to help develop filter sets; did some little bit of tutorial tutoring work where did some of the stuff that Michael Stanley and others do now, did a little bit of that in the early days; designed, did a lot of work on the vacuum systems and the interior, the fixturing and everything.

SE: So in addition of that, how did you feel about choosing to do an employee-owned company with Chroma in the beginning particularly, in line with your previous interests in cooperatives?

JR: I thought it was just really intriguing to do it that way and it definitely thought like we have in our unique situation of all being n it at about the 00:12:00same level if, no one coming in with major bucks to get it started. There was this sense certainly among between Paul, Dick, Wim and myself and Frank, as far as the sales and technical skills, we all did realize that we had sort of our own unique things to contribute which were sort of all essential to the operation, to the success of the company. It is made sense to have some sort of-- the idea of an employee owned company was very attractive to me. Initially 00:13:00it was not [one] hundred percent employee-owned, as you probably know by now, but we kept it mostly employee owned up to the year 2000 which changed the structure to make it [one] hundred percent employee owned.

SE: Actually I haven't heard that yet. For the most part I've heard that it was... I'm not sure it was just an absence of information on whether or not it was wholly employee-owned before then or not.

JR: It was never wholly employee owned up until the year 2000, 2001.

SE: Who else had a stake in the ownership?

JR: David Bradford who is a local machinist, Bradford Machines, in Brattleboro, 00:14:00Vermont. I'm not sure how we developed the relationship, mostly through Wim, I would say and we sold some shares to him where we basically offered for him to buy shares that basically at par value I believe, which was just a dollar, a buck a share at the beginning in return for doing a lot of going out of their way to help us give us a lot of their time in terms of working on building and developing the machinery and fixturing and some of this. So in return for that you know he got, I don't remember how many hundreds or thousands of shares, he was graciously, voluntarily sold his shares in 2000 for book value at the time, so he made out pretty well. But we have an ongoing relationship with Bradford 00:15:00Machines and are still a very good customer there so you know I think overall it's a, good deal for both companies.

SE: As you spoke about that, it did jog my memory; I remember Wim talking about it but I guess between him and the other founders who have talked about it never stated in a way that said Chroma wasn't one hundred percent employee-owned for them, it was just that yeah he helped us you know fund making machine in the beginning because we couldn't couldn't pay for them out right at the time.

JR: No, I mean I could go to go look at the stock records if you want; I mean you could go ask someone to look at the stock ownership history and see how many shares he owned up to the year 2000. We did not distribute anymore, he was not part of the stock bonus program or policy that we were sort of following over 00:16:00the first few years, where every year we were basically, well you know the details, we created our kind of our own systems to maintain sort of flexibility at the expense maybe, of not exactly the best way of doing things in terms of taxes and stuff but we distributed shares every year to all the employees who were eligible for them. Bradford was not, not being not an employee, was not part of that. The shares that he received was about all that he received, at the beginning, but it was a good chunk compared to a lot of employees that were getting shares annually sort of incrementally.

SE: So going back to the first decade, you talked about the kind of work you did in the beginning of Chroma, what do you remember about the development of Chroma as you guys grew through the nineties? And what that looked like it and felt like as the company expanded throughout the Cotton Mill?

Jay: I pretty much stuck to my specialties which was designing filters, working with customers to help them figure out what was the best solution for them, so I think I was kind of an important part of the of the strategy, of Chroma's strategy, which was to provide solutions to the customers and do whatever we could for a reasonable price to get customers what they needed for them to be able to do their work and see what they wanted to see. So to me the filter, the 00:18:00physical filter itself, [was always] part of the package of what we sold. Ultimately we are selling, the ability for a researcher or any kind of scientist to make good measurement, get the data that they that they need, see what they want to see--basically that's what we really are selling and what we do. So our strategy, I think our strategy has so fallen in line with that, we spend, we have, you know, many, we put many hours, the applications scientists and other sales people talking to customers basically trouble troubleshooting their problems; figure out a lot of times-- they think it might be a filter that's 00:19:00wrong and we'll work it out fine that it's not the filter something else in the system. So that's all part of the, part of what I think Chroma sells, it offers a service to customers.

SE: Was there anything that you remember in Chroma's development specifically as an employee owner that marked a significant shift for you and how the company was running, or how the size was affecting the company through the nineties?

JR: Well, you're getting and this could be off the record. I'll be mumbling here a lot so hopefully you can edit some of this...

SE: Even if only one example sticks out...

JR: We eventually had to sort of specialize in what we do and decisions that various levels had to be made. We had a--initially we had company 00:20:00meetings for weekly, on a weekly basis, discussing major issues and ultimately even though there were sometimes votes on various things, a lot of behind-the-scenes, day-to-day decisions and some big ones, really were done by individuals - Paul. There as always this at Chroma this sort of balance between the idea of employee ownership and people all being owners and having sort of like, being able to have input into major decision making processes but then there are the individual personalities and Paul Millman's probably, is the biggest individual personality but he always, he also...I've always recognized 00:21:00Paul also along with Dick is being the true founder of Chroma I think he's been actually very gracious in allowing us to call ourselves co-founders. I mean really it was Paul's and Dicks initial brainchild to sort of like to go--having been fired or [] having resigned to sort of startup that project. Now Wim might have a different view, but certainly from my perspective, it was not my intention when I went to leave Omega and start Chroma. I think that you know the discussions of Chroma had started before I had 00:22:00left Omega so I knew that was in the works and... On the side outside of work, I was starting to help Chroma sort of start plan and everything.

SE: Did you work with Dick when he was putting together plans for Chroma?

JR: Yes; I don't know the exact timeline, as far as what work I did before actually leaving Omega to go on my leave absence but by the time I went on my leave of absence, I pretty much knew that I was going to be at Chroma and I was probably not going to come back to Omega.

SE: Okay; so do you want to talk about how you experienced Chroma expanding through the Cotton Mill and what that was like particularly with adding more people to the kind of work that you did or the kind of work groups that you were in and maybe even difficulties with the kind of town meetings you guys were having at the time?

JR: Well it's been a while, so, it really has been. I think an interesting 00:23:00example of - well I'm just trying to think of the timelines. I'm to even think of when we moved from the Cotton Mill to here, was that 2005?

SE: 2003.

JR: 2003, okay. So before moving to Imtec Lane, I mean a lot of my time was devoted, apart from the day-to-day just working doing my thing at Chroma, was dealing with the lawsuit so there was a whole big period there, sort of a chunk of time where the lawsuit with Omega was like a big part of my energy was voted to. Although apart from that, I did sort of take some of my ideas of - I was always interested in sort of like thinking of what was most equitable way of dividing the profits and looking at things in terms of fair[ness], so I think I did have a lot of input into the structure of some of the ownership systems, the 00:25:00share - I was the secretary for many years, so I helped out in that regard in terms of keeping track of all the stock purchases and everything going on. I probably knew almost better than anyone else, as far as the mechanics of the process. I was also very much involved-- I would say the other big thing which sort of showed a lot of what was going on at home at Chroma was the decision to try to move to a one hundred percent employee-owned company up to that point, like I said, was, there was nothing in the articles of association of the 00:26:00company, no real sort of legal restriction to the ownership of shares. There was no restriction as far as like selling the shares back to the company once people left. There was this point in two thousand when it appeared that that the original co-founders were no longer going to be the majority shareholders of the company and although I didn't find it of huge [import] and I didn't find that in itself, sort of like a truly important, total game changer. There are other co-founders that really felt threatened by that and wanted to sort of put something more into stone basically, a structure where they felt maybe more in 00:27:00control by virtue of there being more rules and restrictions on...the way stock was bought and sold and distributed the company. I think that's how that the restructuring arose. All those discussions, that was sort of a very crazy period of time; it also happen right about the time when we did not know what was going on with the law suit. We had - I'm not sure of the timeline - but we had one favorable judgment from the trial from the trial court but then it was appealed and it was at the Supreme Court of Appeals level at the time when we were doing the restructuring so there was still sort of like this sort of shadow over 00:28:00whether the company what actual value of the company might have been. It was a crazy time and despite having meetings with lots of people involved, I mean we had these major meetings you might find - because there are cassette tapes I think somewhere of the meetings over the restructuring committee and some of the people originally involved in that restructuring committee ended up being some of the dissenters in and where our second big legal issue arose out of that.

SE: That's very interesting, I had not heard I guess the parti[culars]... I feel 00:29:00like maybe in the recollections of the other founders of the litigation on record for the most part, it's just like "oh we had that those two lawsuits in the nineties, remember those?" And they just moved on, which is fine because I think at least with the first lawsuit from Bob Johnson and Omega, that was is all on record and even Paul was like yeah, you can go pull up the Congressional Record and look at it" or whatever, and I think I probably have.

JR: All the dissenters suit is on record somewhere too. I mean we eventually settled that but that was very difficult because it was against, it was about money and it wasn't about like sort of, like the essence of Chroma, and the livelihood: it was like dealing with shares and feeling like the dissenters were 00:30:00asking for way more of a chunk of what we thought, of the company than the founders themselves felt they might even get out of the company. It was really kind of nasty.

SE: So then that restructuring of the how the shares were distributed in the early 2000s, and that was because of the second lawsuit, right? That's what you're saying?

JR: It was the second lawsuit was the result of themselves restructuring.

SE: Okay so...

JR: The shareholders of Chroma voted to amend the articles of association to 00:31:00restrict the ownership rights of shareholders. That led to that led to an opening where shareholders who did not agree with the changes could formally descent and ask to have their shares, to sell their shares back at fair value; fair value quote-unquote fair value, became the heart of the lawsuit and trial. We went actually went to trial over it, eventually settling out of court but to trying to determine fair value for Chroma shares, that was like the heart of the issue... there's a huge disparity between what the dissenters were claiming fair value was and what we thought fair value was.

SE: Well naturally, if they're trying to get money out and descent at the same time right, I'm not think I would do that you guys, but if I were in the same situation...

JR: Right. We really had to think hard about how we value the company and it's still an issue today, the structure of the company still is based on this notion of, 'sine we don't really know what fair market value is because it's such an unusual company' and it would be so expensive to convert, right at this point, to fair market value, that we still use book value as the evaluation of the shares but we have sort of a mechanism that case in the event that the company does go on the market and does realize market value that the difference between what the company actually gets old for and what book value had been, that 00:33:00difference gets distributed equitably among the share[holders], the both the current shareholders and ex-shareholders. So when one leaves the company, you actually get to trade your class a shares for the class B shares which only have value in the event of the sale of the company. That's sort of the heart of the we came up with the deal with this issue of how does one value the shares of the company.

SE: ...So we kind of dug into the aspects of the lawsuit a little bit.

JR: Well the lawsuit wasn't about that, it was about what the shareholders who dissented from that change and wanted to have their shares, sell their shares back, what the value was their shares and what they wanted was as close to fair market value; and in determining fair market value, which could have been many, many, many times more than book value. That was the issue.

SE: So to get the timeline correct, the company was going through a restructuring...

JR: That was at themselves end of 2000, 2000 something. 2000 was when we voted to change in the articles of association and in addition we also amended the bylaws to the match it and actually created like a true sort of a board of 00:35:00directors through the bylaws with sort of a more strict structures to the board of directors at the same time.

SE: So out of that restructuring process is where the lawsuit came from, because as you've been saying, they wanted the market value of the shares.

JR: Right. I honestly don't know why they dissented from it honestly but...

SE: It happened the way it did either way.

JR: I don't want to get into sort of like personal details of the main dissenter, but he did a lot of things for his, I felt, his own benefit. As it turns out, so he was like the financial controller at the time. I'm not saying 00:36:00that he extorted anything but there were policies that we enacted that ended up benefiting him very well down the line.

SE: It seems fishy, in a company is supposed to be more cooperative and democratic, and then one guy has apparently been moving things to benefit himself...

JR: Right, nothing illegal, I mean the example we created this, we sort of, he advocated for a very, very generous long-term disability policy and then he went 00:37:00on long-term disability and we think that he probably said he knew of his own situation and sort of created, helped sort of get as sweet a deal for himself as possible, as he possibly could.

SE: Yea, I think Paul's essentially given me the same story. So, moving forward, I kind of want to talk about what it was like moving up here into, now, the Bellows Falls facility, little bit later, I've have said it was about 2003 to 2004, and anything you remember around that...

JR: Well yeah, I mean that's--I think I was trying to get to this this whole time but in terms of how things really work at Chroma...this example where we had the idea of having sort of like the shareholders... like we had... I can't remember if we decided to try to have a one-person one-vote vote as where to move to move, but basically it was like, "we could move anywhere we want", as 00:38:00long as it was where Paul wanted us t move to. I mean that's basically how it ended up being structured, I mean we were going to stay in Vermont even if the majority people already lived in New Hampshire and were fine moving to Keene, New Hampshire, which was the other kind of option; you know staying in Vermont and moving up to Bellows Falls which at the time for most of us was like the boondocks. I mean a lot of us were more focused in Brattleboro at the time but it was staying in Vermont and that was very important for Paul for political, for his own political reason and you know... again I'm not saying it was a bad 00:39:00idea, I mean he... having, maintaining our image as being a Vermont company for him was very important and strategically from a business standpoint it might have been a really good idea and it still be a really good idea to present ourselves as not just an employee owned, a one hundred percent employee-owned company, but also a Vermont company. To the rest, there are a lot of research the world maybe that does seem attractive, small town, and those... Vermont sort of like Vermont cheese or something like that; maybe it has like that homegrown, cashe to it or something and I'm not the sales person, I'm not into marketing and it might be great, but I'm not sure he totally convinced everybody to agree to that; it was more like this is important to him and certainly at the time--we 00:40:00do not want, it's everybody's intention for Paul to not leave Chroma it in a bad, in an antagonistic relationship when Paul leaves Chroma. I mean he could wreak... I'm not saying... it's best for everyone for there to be, for when he does leave, for it to be in a very amicable whole way so if there were some times when Paul really kind of put his foot down, it's either my way or the 00:41:00highway, and sticking with his way, the highway was not a good way to go for the health of the company. So it's one of those things where Chroma was doing really well, staying in Vermont might be part of that; but I'm not sure that was sort of a company-wide decision. Now I don't remember the specifics of the vote that sort of ended up sort of getting us to Vermont, or to this spot, but there were some more there was more than one vote involved I believe.

SE: Yea, I think for me, between the document that Paul has given me and some other things I've looked at, it looks like there was originally a one-person one-vote, clearly a vote, but because of the-- I guess in Paul's document he gave me, depending on how this conversation goes, I'll be editing more things 00:42:00out of this over time, he phrased that they, not explicitly who, but said an employee owner, which means that he doesn't have to disclose which employee owner or their a founder or none founder, but he said that an employee owner had identified that 5 of 6 of the founders had voted to stay in Vermont. So then the call, the second vote was one-share, one-vote, because the founders otherwise had majority at the time, or close enough to stay in Vermont, was the decision. I'm not sure that rings the bells.

JR: It does, but don't source it for me. I mean I don't know details. I would say that that sounds right but only because heard that to told me told me before so I can't sort of vouch for that history - it might be true, I can't vouch for it.

SE: Who knows, maybe my historical document will also do some of this rewriting.

JR: I mean there are... somewhere we probably do have notes... (Jay takes a 00:43:00phone call)

SE: Okay, do you remember where we are?

JR: Talking about this moving to Imtec lane and what the history was there. I was going to say there are probably some minutes to meetings somewhere that sort of have some sort of documentation of that-- I'm not sure where they are.

SE: Were I in grad school doing this, I would access those as soon as possible, but I do not have the time or the skills to do that.

JR: I'm not sure it's worth it, yeah.

SE: Neither do I. Yeah, okay, so you know moving on - you clearly chose coming here to Bellows Falls, to stay in Vermont. Looking through the early 2000's and I guess we can even kind of bring us up to now in 2016, what were some of the other developments that you saw in the company that kind of stick out in your memory? In size, difficulty with getting too big and how to make decisions, the kind of the development of structure the governance...

JR: Well, I think this most recent change on paper anyway, of management structure is going to be, hopefully it's a big deal. I hope we're not just hiring people to just get salaries; hopefully things are happening but it is, I 00:45:00understand, I know it's a slow process. I think, I think the challenge is going to be for the board of directors to remain in the loop enough as the board of directors to really go to stay on top of the wealth of what's going on in the company in order to be, to truly do their job advocating for the shareholders. That's sort of one of the big challenges with the way it's currently structured; we're not only an employee-owned company, but were employee only board of 00:46:00directors. It doesn't have to be that way, there's nothing in the in the articles of association, for example, that specify that. It's something that we could change at any time. There's been discussion about trying to open up the board of directors to outside directors and who knows maybe that's sort of a possible change and can sort of change things. But right now it's hard to sort of keep track of all the hats that one wears and be able to separate responsibilities but I think... it's hard to sort of say where Chroma is right 00:47:00now because we're all so busy just trying to get stuff out which I guess it's a good thing. I think we do need to make sure we're working towards, I'm not sure the ownership model is going to work too much longer, so, let me step back on that. Right now there are aspects of the current ownership model which I think 00:48:00are troublesome and make it difficult for the current founders that are still here to leave especially, Paul, and I think the hardest part about it for me is that it's...the true value of the company can only be realized, since it can only be realized if the company [is] sold, there's this sort of inherent instability to it which means that the company has to be sold at some time for it to really sort of like come, for the value of the company to be realized and that's hard for us who are getting older and the mechanisms in place I don't think are solid enough for us to really feel totally comfortable leaving Chroma at this time without feeling like we might... what we think is our fair share in the equity of the company being maintained. I think Paul and others, I think we 00:49:00do need to get on and bite the bullet and work on seeing if we can work through the ESOP structure [and] system and see if we can make that work for us. It's not an easy thing because unfortunately the fair market value for an ESOP is themselves way a company's value is tightly regulated by the ESOP rules and there could be a huge discrepancy between ESOP version of fair market value and what the company really is worth on the market. I mean as you know, technology companies it's very hard to judge how much a technology company is really worth 00:50:00if they're actually being sold. So I think the founders, current co-founders don't want to shortchange themselves, miss out on that; so on the other hand and I don't think we want to feel like we have to sell the company before we leave--that would be least for me, I really do believe in the employee ownership model and would like to make it work and be sustainable. I'm not sure that ultimately that current structure really is sustainable over a long period long period of time but... I hate the word sustainable but... viable, workable. Sustainability is overused.

SE: Exactly. I appreciate you talking to me so clearly about those issues in the... you and the other co-founders transitioning out because I've heard a 00:51:00little bit about that but it would be interesting to see... I understand that turning the company into an ESOP would be very expensive and it wouldn't be easy because of how highly regulated it is.

JR: Yea, I've never been really good with business & finance and stuff so despite having read ten times over how the ESOP functions, I still can't count myself as an expert on it but yeah we do have to, we would have to figure out how to pay the current shareholders at the fair market value which is going to be, since it going to be a lot more than book value, there has to be a way, the company has to come up with... it's sort of a weird process where we'd be selling it to ourselves, in essence, but just a very different price so we have to pay ourselves, figure out some way to pay ourselves, without going broke 00:52:00doing it. So it will take time I mean it can be structured, it might be difficult doing it same time that we're expanding the building, just from a cash-flow perspective... the banks have been pretty generous to us so I'm not sure there's a bank out there that wouldn't be able to go into, be willing to finance the sale of the company to an ESOP. But I think we do have to keep on working towards that.

SE: I want to shift gears a little bit because we're here now at like 52, 53 minutes; I'm not sure when you have to go...

JR: I really sort of have to go in ten minutes...

SE: That's perfect, yeah, we can finish in ten minutes. So we've talked a lot about the technical details of both the lawsuits, and themselves ESOP ownership models look like, do you want to talk a little bit about how you've experienced 00:53:00or seen like the culture of employee ownership developed and function in this company?

JR: Well I think it's really a mixed bag. I think there's a lot of there's the obvious upside of the bottle that we have right now which is more than just the employee ownership, it's also the ultra-fair, more than a living wage that we that we provide. The upside is that there are lots of people here who are 00:54:00doing really well, better than you know, and are really grateful for what a good thing it is to be working at Chroma and I think they show that by caring about Chroma and being you know good sort of corporate citizens in a way they're staying involved and helping out with the culture, with things having to do with the culture of the company. The cultural affairs, and there a lot of people do a lot of volunteering who helped get parties organized, annual parties, do a lot of these fundraising things like I know you saw the Secret Santa thing which is 00:55:00amazing when you see all the presents that people give. On the other hand the downside is there can be employees that are in a situation where they don't want to be here but they can't afford to leave and that's not a good situation. So that sort of the downside of it. And there's the question about whether it's really we're going to be able to keep on making enough money to pay for this wage scale that we do. It does concern me the pace of change, technological change, our ability to automate. It seems like we're just dragging a little bit, not getting stuff done to implement more, some of important automated process, 00:56:00automation in largely the area of test, measurement, and quality control. I think that's going to be important. I mean Paul mentioned this at a recent annual company meeting: I think we have to learn how to stop, expand our productivity without hiring more people and we don't want to automate and--we're not going to, I don't think anyone wants tolay people off because we sort of got a machine to do what they were doing, but we want them to be able to expand, allow them to do other things that need to be done and so expand our 00:57:00productivity and our work without actually hiring more people to do this roadwork that's really hard to do. It's difficult work to begin with and I wouldn't want to be doing it. There are a lot of jobs here that I'm glad I'm not doing. I think that's probably the biggest technical and business challenge that we have. Now that there is this senior management, management now has the-- is a group of people that now can kind of do a lot more openly what they've been doing before. This gets back a little bit to a point about this idea of there being a lot of group decision-making but when it comes down to it, the 00:58:00individual strategies, the individual decisions are made based on what individuals are doing decide to do. There are... Paul, for example, has been pushing, trying to move Chroma towards getting into the larger volume market which there's a lot, there are several of us like Wim, maybe, I don't know where Wim is at but, who always loved the small shop culture where we did smaller numbers of really difficult interesting things. To do lots that one thing for these prices with diminishing returns. You make a lot of them but the cost less and it becomes more important how you sort of like do, whether the cogs workout, 00:59:00cost of goods and maybe you can sort of trim that the cost of production to a point where you can sell it cheaply and you could, with a high-volume, you make a lot of money or lose a lot of money based on just the minor tweak or miscalculation of what it really takes, costs to make something. So he's pushing us more in that realm and that had never really I felt been a conscious strategy decision that everyone agreed to at the board level but Paul has been pushing us towards that, moving towards that. Now I think he can more overtly do that 01:00:00without - by virtue of being the CEO - and I'm okay with that actually, at least it's open now. That shift worries me in terms of ultimate culture of the company but I do recognize the basic idea for the company to be viable they have to be growing; the idea of when a company is not growing, it is actually dying. That sort of one of the natures of capitalist society, maybe it has to do with the fact that you know... I don't want to get into the philosophical but I think I do understand that aspect of economic activity that you have to be expanding in order to stay... that is the steady state, steady state model is to be growing. 01:01:00Maybe it has to do with the fact that the population is increasing. If you're keeping up with the expansion of human life on the planet, which drives a lot of what we do I mean that it's not just the population but it's the introduction of more advanced medical technology and to the third world, China. I do applaud Paul for having to the foresight to create more global presence, having actual offices in some of these countries because that really is where the growth in 01:02:00the market is coming from now. At least it was until January twentieth that's where it's been. Honestly, China is a big question mark; I mean I don't like the direction politically the China's going that could all fall apart by virtue of China and not the US but for now it's been a really good idea and it's good for the people of China. I think having more advanced technology, more better medical technology, clinical capacity is good so we'll see if it can all hold up.

SE: Thank you very much Jay.

JR: Alright. [Laughs]