The sporting life

The sporting life

If business is a sport, Dan Gladney plays all-out at four local firms

by Neil Orman   Gatorade’s tagline is “Life is a sport.” Dan Gladney’s could read “Business is a sport.”

The Detroit native absorbed self-improvement, competition and teamwork when he played football and ran track at a private Catholic high school. Gladney played varsity in both sports all four years, and he was voted “hardest hitter” by his coaches for his work as linebacker.

“Sports provided the discipline that he’s applied since then,” says Mark Ratliff, a childhood pal who has remained a close friend. “He knows how to practice every day and be a team player.”

Ratliff recalls how Gladney, now 51, didn’t let the Motor City’s sometimes-dreary weather deter him from his daily jogs.

“He’d throw his sweats on and go for a run for an hour and a half in the pounding rain,” Ratliff says. “It’s part of his DNA. He’ll think ‘today’s a practice day.’ ”

The sportsman has certainly been a great recruit for Minnesota’s medical device community. He serves as CEO of New Brighton-based Compex Technologies, chairman and co-founder of Roseville-based Heart Leaflet Technologies, and an active board member of NeuroVasx of Maple Grove and Incisive Surgical of Plymouth.

The former football star has applied the same disciplined mindset from his athletic interests to business.

Take a crisis that occurred at Acist Technologies of Minneapolis, where Gladney served as CEO from 1996 until the company’s acquisition in 2001, which one source pegged at about $100 million (although Gladney wouldn’t confirm that due to a nondisclosure agreement). Just a year before the deal that established Gladney’s reputation, Acist was fighting for its life. The medical device startup had developed a method to automate and simplify the process of conducting angiograms, and its chief market was Europe.

Everything was going well until TUV, the certifying agency based in Germany, said Acist had problems with its paperwork, and, in August 2000, banned the firm from further European sales until the problems were resolved. Specifically, the agency questioned whether the Mexican manufacturer Acist used was building the devices in a sufficiently clean environment.

“The company was literally shut down,” says Norm Dann, a board member at first Acist and now Heart Leaflet. “To get it resolved, we thought it would take four or five months. Dan said we’d have it done in 30 days. And by God, he did it.”

The episode was revealing about Gladney. Rather than dissolving into anger and panic, the former jock approached the event as a competitive challenge.

“I corralled the management team and said, ‘What’s it going to take to get this done in 30 days, and to get it back very clean with zero nonconformities?’ ” Gladney says.

His rattled staff responded that what Gladney wanted couldn’t be done, if they were still expected to do their jobs. So, he said, dump everything else from your plates and focus on meeting TUV’s documentation requirements. To ensure it was done, he invited TUV’s staffers from Germany to fly over to inspect their work after 30 days. As the deadline neared, the team’s morale rose.

“You’ve got me pushing, saying ‘we will, we will,’ and the team saying ‘maybe we can,’ working on it every day,” he says. “Every day we would do reviews, and we’d say where are we, what do we have to do?  And halfway through the process, we began to hear, ‘we can do it, we will do it.’ ”

And they did. Acist passed the regulatory audit, and a year later, the business was sold to Bracco S.p.A., the Italian pharmaceutical company that had been its distribution partner.

This episode reveals the hallmarks of Gladney’s management philosophy, such as his emphasis on teamwork and setting high goals within an organization – so high, in fact, his staff sometimes resists them. In Gladney’s mind, “no pain, no gain” could be applied just as well to the board room as the weight room.

But he leads by example, and there is plenty of pain involved in the goals he sets for himself. For example, since Acist, he’s stacked his plate too full for most executives, with both his leadership of Compex and his startup board roles. Before taking the Compex job, he negotiated a deal allowing him a percentage of time on other board business.

During his lunch break or on his way to work, he can zip over to Heart Leaflet or one of the other companies in which he’s involved. He works 65-hour weeks, but he’s not complaining.

“It does take a lot of time and it’s completely encompassing,” he says. “But I’m also absolutely delighted to be here. I’m lucky that I was born with a high metabolism and energy level. I’m creative and I think I manage my time very well.”

Although Gladney’s main job today is managing a relatively large, publicly traded company in Compex, he’s a start-up guy at heart. He has come to enjoy the same adrenaline-pumping and challenging qualities of startups he enjoys in sports. He got his first taste for entrepreneurship in his early 20s. After graduating from Eastern Michigan University, he worked for a large Canadian company, Moore Business Forms. He was a natural salesman and, at 23, co-founded a firm, J&J Business Forms, selling business forms to hospitals.

“I was working during the day selling business forms, and at night I drew them up and submitted them, and also worked as the bill collector,” Gladney says.

The firm was successful but he began to miss having a personal life.

After two years, he decided to take a regular job as a salesman in the medical device industry, to which he had some exposure  during his business forms days. He sold his stake in his business forms firm to his like-minded pal Ratliff, who used the proceeds from that business to launch his own computer brokerage company.

Gladney then began a long period at medical device giants learning the industry.

He had an 11-year stint as a sales and marketing executive at Kendall Co. He went on to work for another medical device giant, Baxter, in Orange County, California. After about 18 months there, Gladney learned Baxter was going to sell off a small startup division developing endoscopic instruments for general surgery. Sensing his chance to return to entrepreneurship, and now armed with deep industry background, Gladney and a few co-workers asked if they could spin it off. The startup, Endomedix, didn’t do that well, but Gladney says he learned a lot from the setback.

“I learned that, as an entrepreneur, you have to focus on cash management versus the P&L,” he says. “Also, I learned that you don’t do it with a lot of people. You do it with a couple of really talented people.”

After Endomedix, most of Gladney’s former Baxter peers had had enough of entrepreneurship. But Gladney felt just the opposite and opted for another startup, the San Diego-based firm Cardiotronics, where he headed sales and marketing.

Cardiotronics, which had seen little growth, offered an alternative to the use of hard paddles to defibrillate the heart. Instead, it used disposable electrodes hard-wired to the defibrillator to make it safer for the user, who stands away from the shock at a safe distance. During his two years there, the firm grew from $500,000 in sales to about $10 million. It was sold to Utah-based Ballard Medical Products in 1996 for an undisclosed price.

After that came the biggest and most life-changing success of his career: Acist.

“He knew something about the medical products industry,” says Dave Johnson, president and CEO of the local investment firm Miller Johnson Steichen Kinnard, and an Acist board member who helped recruit Gladney. “He was very outgoing and aggressive.”

Gladney was also a good match for the firm’s inventor and founder, Robert Wilson. Gladney is someone who talks about the importance of “team” constantly, and he says no team member has proven more crucial to his success then the brainy cardiologist.

“He is a brilliant physician, and he’s very creative,” says Gladney, describing Wilson. “He comes up with the idea. I can take that idea and turn it into a product, and build around that product a business, a distribution arm, a manufacturing group, quality, and bring it to the marketplace.”

In fact, since their Acist success together, the two men are again joining forces at Heart Leaflet Technologies, which, like Acist, is based on technology Wilson developed: a minimally invasive method of replacing heart valves.

For his part, Wilson said their relationship is based on mutual respect, which allows the two men to conduct tough negotiations with each other without souring the relationship. Take, for example, when they negotiated the terms of Gladney accepting the role of chairman at Heart Leaflet.

“It was a classic negotiation,” Wilson says. “I was trying to create a structure to incentivize him to stay in the company for the long run, and he wanted to get as much as he could upfront. It was amiable and tough-nosed at the same time.”

Both Wilson and Gladney say Heart Leaflet promises to find even larger success than Acist. Wilson says the company is “about twice as far along” as Acist was at the same point. The company has completed initial animal studies and is now fine-tuning its prototype. They expect it will be three to four years before the company could receive regulatory approvals and hit the market.

Gladney surprised his closest business associates, who knew him as a startup guy, when he took the job at Compex, a 32-year-old publicly traded company with a conservative culture. But, in his unusual time-splitting agreement with the company, he found a way to stay close to startups and take on a brand new challenge.

Compex, which was then called Rehabilicare, certainly provided that, when he joined the company in mid-2002. The company had experienced slow growth, and its stock price had stagnated around $3 or $4 a share. No Wall Street analysts even followed the firm.

“The company had really struggled,” says his long-time colleague Norm Dann. “I really questioned why he would want to do it. But as soon as he became president, I bought some of their stock, and it looks like he’s doing it again.”

In contrast to some of his peers, Gladney says he saw a diamond in the rough in Compex. Compex sells electrotherapy devices to the medical market, particularly physical therapy clinics. Those devices deliver electrical energy through a series of electrodes attached to the skin, causing muscles to expand and contract without the wear-and-tear of pounding.

Even though the company’s growth was lackluster, it had a steady cash flow and it was profitable, so Gladney and his team wouldn’t have to raise financing. He saw an opportunity to raise the company’s profile with Wall Street, drive new growth and, in a sense, build a new business. “I’m using a lot of the same skills I use in startups to do that,” he says.

For example, Gladney saw a chance to spur growth with new products and a greatly expanded marketing campaign. For one thing, the company had received approval to sell its electro-stimulation products over the counter before he got there, and yet had never acted upon it, offering a chance to sell directly to consumers. And he expanded the company’s efforts to target the medical market from just physical therapy clinics, to doctor’s offices, as well.

And the fact that it was involved in sports attracted Gladney, too. For example, one of the firm’s top-selling products, Compex Sport, is a hand-held electrotherapy device athletes use to stimulate muscles, and its spokesperson is pro football legend Jerry Rice.

Gladney’s most controversial move at the company was to enter the market for abdominal belts: electro-stimulation belts that promised users perfect abdmonial muscle tone. The move  raised eyebrows because, when he made the decision, the ab-belt market had been completely discredited.

Two and a half years ago, consumers bought $300 million worth of ab belts deemed to be ineffective in a span of just 10 months, before the Federal Trade Commission yanked them due to false advertising claims and ineffectiveness.

Eagerly eyeing the potential pay-dirt from a medically approved ab belt, Gladney convinced Compex’s board to attempt to revive that market in the United States by selling products that promise to fix the flaws of predecessors. Some of those flaws included not working and a propensity for delivering painful shocks to their users. In February 2003, the company licensed a product called Slendertone from Ireland-based Bio-Medical Research (BMR) Ltd., which has been successfully selling the ab belt in Europe for several years.

Slendertone is the first ab belt the Food & Drug Administration has ever cleared for over-the-counter sale for “toning, strengthening and firming abdominal muscles.”

Compex’s board members backed the ab-belt plan, although some expressed concern about how long it would take to produce a return. There were outside critics as well.

“There are a lot of naysayers about the whole ab-belt thing,” says Patrick Donohue, an analyst with Northland Securities of Minneapolis who follows the firm. “But that is why they brought him on board. He’s not afraid to execute or be wrong.”

And Wall Street seemed to love Gladney’s plans for Compex — at first, anyway. Three analyst firms began following the company. In addition, one of Gladney’s self-imposed goals was to get the stock price from about $3 to $20. He was well on his way in 2003, when it shot up to about $12.50 a share. Since then, it’s dropped to around $6 a share. And the company missed its expectations for its third quarter ending in April.

Gladney says part of the reason for the company’s recent challenges is delays attracting a celebrity spokesperson. Compex aimed to hire that person by last fall, but it was unable to do so until February, when it scored a big coup by signing Sarah Ferguson, the Duchess of York. “On the consumer side of business, we’re running a good quarter and a half to two quarters behind,” he says.

But Gladney says he expects the firm’s momentum will resume once Ferguson’s marketing campaign has had time to take effect. The coming months will prove whether he’s right.

Gladney has been married for 23 years to his wife, Diane, and he has three children.

And sports have not ceased to be a major part of Gladney’s life. When he left high school, he was a walk-on on his college football team, but an injury ended his career his freshman year. When he lived in California, he ran marathons and and did hundred-mile road bike races. Since he moved to Minnesota, he likes to play golf and jet-ski around his Lake Minnetonka home. But it’s business that absorbs the athlete’s main competitive energies these days.

“Some guys might like to go play golf all the time or climb mountains,” Gladney says. “My hobby is being involved in startup businesses.”

[contact] Norm Dann: nd******@*ol.com. Patrick Donohue, Northland Securities: 612.851.5954; pd******@*****************es.com. Dan Gladney, Compex: 651.638.0419; Da*********@****************es.com. Dave Johnson, Miller Johnson Steichen Kinnard: 612.455.5570; dj******@**sk.com. Mark Ratliff, Virtual Services Inc.: 313.909.8071; dm*@********rp.com. Robert Wilson, Heart Leaflet Technologies: 651.633.5477; ro***********@*****st.net.