Robinson: Why Golisano’s latest investment in Bak USA is a turning point

Bak USA, the Buffalo tablet computer maker with a social conscience, is starting to look like a real business.

The company last week secured another $10 million investment from B. Thomas Golisano, the billionaire founder of Paychex and the former owner of the Buffalo Sabres, who has made three separate investments in Bak USA totaling $30 million since the venture in social entrepreneurship was launched in January 2015.

Golisano owned a 50 percent stake in the company before his latest investment. The company declined to say how big Golisano’s stake is now.

Regardless, the investment will provide the money Bak needs to increase its tablet production and to invest in new machines, called cobots, that will work alongside the teams of Bak employees – many of whom are from vulnerable populations, including refugees and immigrants who lacked formal education.

Even more important, in the view of company co-founder J.P. Bak, it will help prove that the tablet computer company’s unique business model – putting people on par with profits – can not only be sustainable, but successful.

“Our business model, as far as we are concerned, has proven to be valid,” Bak said. “Our biggest hurdle the first two years was to convince the world that we were sustainable, that if you bought something from us, there will be a service available next year.”

That business model, in short, is to build a company that can do good and still do well financially, even if it involves making tablets in a consumer electronics industry dominated by giant companies in a tiny technology market like Buffalo. It also means doing it in a way that provides gainful employment and develops new job skills in a corps of workers who otherwise might have struggled to find much more than menial work.

J.P. and Ulla Bak at the Bak USA facility in Buffalo in February. (Derek Gee/Buffalo News file photo)

“Why is Buffalo so ideal? We could not have done that in Manhattan. We could not have done that in Detroit. We could not have done that in Los Angeles or San Francisco. No. We could do it in Buffalo now because we are early in the renaissance and we can still afford it,” Bak said.
Golisano’s investment is just one of the signs that its model, which the Baks first tried in Haiti after the devastating earthquake there, is working.

• The company, which had about 80 workers in March, expects to bring on its 100th employee in the not-too-distant future. The company plans to hire another 10 assemblers to work at its Michigan Avenue production facility. Bak would love to hire another 10 software and hardware engineers as the company takes on more of the design work for its products.

• Bak USA’s sales have reached the $5 million level – a point that allows it to qualify for a spot on the New York State vendor list. That’s important because one of Bak USA’s tablets is a durable model designed to be used in schools. Making the vendor list could open up a slew of new potential customers in the state’s education market for school districts seeking tablet computers that don’t cost an arm and a leg. Bak USA already has sold tablets to more than 400 schools across the country.

• Bak expects the company to be profitable next year – a key development in the company’s quest to become self-sustainable – although it will have to raise capital if its sales increase. If all goes well, Bak USA could be profitable during the final four to six months of this year, he said.

• Its relationship with Microsoft, which puts Bak tablets in Microsoft stores across the United States, Puerto Rico and Canada, has bolstered Bak’s sales to the point where its Atlas education tablets are selling as fast as the company can make them. The Golisano investment will help Bak increase its production by allowing it to stockpile more of the components that go into each tablet.

Team Leader David Morales Dowins stacks newly assembled Atlas 12 computers on a rack at the Bak facility in Buffalo in February. (Derek Gee/Buffalo News file photo)

“We are sold out,” said Bak, who recalled getting teary-eyed when he saw the first Bak tablet in Microsoft’s flagship store in New York City. “In my wildest fantasy, I would never think that would be possible.”

Adding cobots, at first glance, seems to run contrary to their people-first focus. But Bak says the cobots will largely do tedious and high-precision tasks, such as screwing components into the tablet assembly.

The company last week produced its first tablet made by a team of five assemblers and one cobot. With the Golisano money, Bak hopes to go from one cobot today to four or five.

“We know it works,” Bak said. “We don’t know exactly the efficiency of it, but we know the increase in quality because of the way it screws. All of these things that have to be very precise.”

If all goes well, Bak even can see the company expanding beyond Buffalo, opening satellite production facilities in five or six other cities, while Buffalo remains the company’s “power center.”

“We have been blessed,” Bak said. “We started as a social enterprise. If we did not have this human factor, we would not have gotten Microsoft.”

“For us, it’s now a matter of spending the $10 million wisely so we can get the benefit of what we have achieved so far and we can further prove that business can be done differently and still be successful.”

David Robinson is deputy business editor for The Buffalo News. He writes a weekly column on Buffalo’s Business.

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