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SPEAKER: All right. Now, let's go back to the beginning of Medtronic and a little about the history of the pacemaker. First of all, what is a pacemaker? What does it do?

EARL BAKKEN: It's a little electric stimulator, very small, low energy impulse. And you trigger the heart to beat with that impulse. If you trigger the heart muscle at one point, the whole thing will-- you don't supply the energy for the contraction. You just trigger the contraction when it doesn't self-trigger.

Pacemakers or stimulating the heart was first done in the early 1800s. Some of the first records of a child being stimulated is about 1802. And pacing the heart has been done over the centuries since then.

But it's only in the last years-- so we made our first pacemaker in '57 because transistors had just become available, and you could make a small electrical stimulator that could be carried or worn by the patient rather than it being some big complex device that had to be plugged into the wall.

SPEAKER: How did you ever get interested in this whole field anyway?

EARL BAKKEN: Well, my interest of getting into biomedical engineering, and particularly the electrical side, was when I first saw the Frankenstein movies when I was nine years old in 1931. And Dr. Frankenstein used electricity to reanimate this creature he had put together.

And that was an inspirational movie to me in the sense that I said that's what I'd like to end up doing, is making devices that bring about changes in people. And so I kind of stuck with that theme throughout my life.

I built robots when I was a teenager. And that's when I learned not to smoke when I built a robot that smoked. And I used a hot water bottle that cost me, I think, $2.50 or so at the time I purchased it, which was a lot of money for my family.

And after a couple of packs of my dad's cigarettes, the water bottle fell to pieces. And I thought that was a good lesson not to smoke. But I kept with that theme through a World War II and into college.

In college, I took electrical engineering because that's the best you could do in getting toward the biomedical engineering, which wasn't a big field back then in the '40s.

And when I was in graduate school in electrical engineering, I started wandering over to the hospital side, which here in Minneapolis is right across from the engineering school and began to work in servicing some of the electronic equipment that was just coming into use in the clinics, in the university hospital.

And so in 1949, a brother in law-- and I thought maybe there was a business in servicing medical electronic equipment. So I quit graduate school and he quit his job at a lumber yard, and we set up Medtronic in a garage in Northeast Minneapolis.

In the first month we were in business, we did $8 gross business. This year we're running at a $2 billion a year rate. So it's grown pretty well over the years.

But that led us into selling equipment manufactured by other people. And through that, I got acquainted with the surgeons at the University of Minnesota working with them in the animal labs and then in their clinical surgery areas.

And in 1954, they started doing the open heart surgery on blue babies, and they would inadvertently produce what's called heart block in about a fifth of the patients.

And so Dr. Lillehei, who was the head cardiac surgeon then leading this work, wanted to know how to keep these babies alive post-surgically. So we adopted the AC operated pacemakers that were available then for keeping the kids hearts beating post-surgically. And the kids recover within a few days and their heart starts beating on its own again.

But then in '57, there was a power failure in the Twin Cities. Northern States Power Company remembers it as Black Thursday because all the power stations in the Twin Cities went down for several hours. And many of the patients, children, were in their rooms, not where there was emergency power. And they lost one child on an AC-operated pacemaker.

And so Lillehei came to me and said, isn't there some way we could have a battery backup on these pacemakers? And I said, sure, we'll-- it was on a cart and I said, we'll put an automobile battery on the bottom and an inverter to change it to 115 volts to run the pacemaker and have a battery charger there to keep the battery charged if you have AC available. But if the AC fails, the battery will keep it running until you can get the child to emergency power.

Well, when I came back to the garage and thought about going through a whole cart of apparatus and knowing that we just needed a little pulse, less than 10 volts at 2 milliamps, seemed like a lot to go through.

So I looked up a circuit in popular electronics magazine for a metronome, which was a speaker that just puts out clicks that you can change the rate of the clicks. And the rate of a metronome is the same as a heart rate range approximately. Very close.

And so I just plagiarized that circuit, put it in a box and brought it over to the university. And we tried it on animals one day, and the next day they were using it on human children. So that was the start of pacing industry.

And then in 1960, we got into the implantable pacemakers with Dr. Sam Hunter in St. Paul on older patients who develop heart block as a consequence of aging and disease of the heart. So that's really how we got started.

SPEAKER: What were those early days, weeks, and months like working out of that garage?

EARL BAKKEN: Well, it was interesting, but it was constant work working way into the evening every night. We didn't have any air conditioning, so we had to run a hose on the roof to try to keep cool. And in winter, it was freezing in this little garage because it wasn't insulated, that wall well.

But we began to grow and to make more pacemakers and we finally moved up to Saint Anthony Village and our first building built with a clean room for manufacturing implantable pacemakers. But it was a struggle. We went through-- essentially came close to bankruptcy in 1960.

And that's when we found two other groups that would go along with us, Northwestern National Bank on Central Avenue. We had a foolish banker who was willing to take over the loans from another bank that was going to foreclose on us, if he could come on the board. And we found a small business investment company that was willing to put in a couple of $100,000 if they could put two people on the board.

SPEAKER: You have succeeded at two things that a lot of founders and a lot of entrepreneurs have a great deal of difficulty with. And one of them obviously is managing a business successfully and the other is seeing the business grow and thrive after they have stepped away from it. What are the secrets to that success?

EARL BAKKEN: Well, I think it's a lot recognizing your limitations. Inventing something is a major step, but that doesn't produce a business. The process of turning a product into a business and an industry is an entirely different thing that, as you point out, so few entrepreneurs really succeed with because they tend to think that they've created something that they can also cover these other spots.

And I'm sure there are people that can do that, but it's pretty rare that you have both talents. And you can get good leadership people who can learn the technical side much easier than you can get a technical person to learn the leadership side.

So I think it's important for entrepreneurs to find that person or persons that they need to fill all of these other roles. I think it's important to continue to sell a mission, keep every employee, as I still do--

Even though I'm retired, I meet with every new employee in the world to tell them about the mission of the company and go through the mission, and give them a medallion that they can have on their desk that indicates the mission of the company.

That's very important that everyone have the same vision of what you're trying to do, as everyone in our company has to this day, even though we're 10,600 people now. They all know what the mission is, what they're working for. And I think that's extremely important.

I think it's extremely important for leaders to walk the talk, to be sure they're never saying anything that they aren't doing themselves. The leaders have to live by it-- when we say everyone is equal in the company, the leaders have no parking places, they have no special privileges.

Every one of us requires a badge. If I don't have a badge, I have to get a temporary badge and leave a driver's license or something until I go out. And so as a result, no one else complains about wearing a badge. Unfortunately, we have industrial espionage in our business. And so those things are important.

But it's important for everybody to live by the same rules and standards and not-- even in their personal lives, I think leaders have to live a personal life that employers can respect and then follow.

SPEAKER: You started a museum in Minneapolis, the Library and Museum of Electricity and Life. Tell me a little about that.

EARL BAKKEN: When we made the first pacemakers in the late '50s and early '60s, I was asked to give talks frequently to Kiwanis clubs, Rotary clubs, and so forth on pacing because it was novel back then.

And in order to do my talks, I'd like to collect the history of pacemakers just to start past, present, and future in these talks. And so I had one of our librarians start collecting the history of pacing, and he found some pacing work in 1931, some patents on pacemakers then in 1925.

And I was getting astounded because I didn't have any idea there was pacing going on back then. Then he found work in the 1800s and back into the 1700s, and began to find a few books on the electrical stimulation back in those days.

And so we set it out separately and moved it to this home on Lake Calhoun. We did put a large underground vault in to store now that we have over 10,000 rare books on medical electricity going back to the 13th century. But it kind of grew and it now has become a very powerful place for education.

We're concentrating a lot on key students, high-quality or high intelligent students who may be overlooked from any ethnic background, but students who otherwise might be lost and helping them get into science to understand more about, of course, medical electricity, but not necessarily to direct them in that day, but into science.

And we have about 3,000 students who come through there during the year from schools, on tours, all day tours, and we hope to spark some interest in them in science.

And we have a teacher institute during the summer of helping prepare science teachers to do a better job of teaching science. And so we're-- and operating. It isn't just a museum. It's a functional place that is helping the advancement of science and particularly of young people.

SPEAKER: Earl Bakken, Chairman of Medtronic, Thanks very much.

EARL BAKKEN: You're welcome. Thank you.