The life of Ben Klassen

When I left for Europe my main objective had been to explore the possibilities of having my electric can opener engineered and manufactured in Germany, if they could do it for less per unit cost. What I had learned is they could not, and that what with shipping, time delays, excise duties, etc., it was not economically feasible. Now, back home, I was also back to square one, except for one thing. The Hanover Fair had opened up the possibilities that there were a number of items available that could be imported, distributed and sold in this country at considerable profit. In fact, there were any number of American importing companies doing just that. Why go to the expense and hassle of
manufacturing anything when you could import somebody else’s product already made, waiting for buyers? So, I had an important decision to make. Should I pursue the development and manufacture of the push-button electric can opener or should I go into the import business? I already had snagged two exclusive items, frivolous as they were. One was a little plastic, many-jointed little horse, that sat on the dashboard of a car. When connected with the carburetor intake by a plastic tube, it performed a number of interesting antics, reflecting the status of the vehicle, whether it was accelerating, slowing down, cruising, or whatever. The other was a two-cup electric coffee pot that plugged into the
cigarette lighter on the dash. It could come in handy when camping or traveling. The first thing I did was consult with my friend Bill Adcock, with whom I played a lot of tennis and who had a well established business as a hardware wholesaler. The next thing I did was call on a few hardware and automotive stores to get their reaction. The results of both of these surveys were not too encouraging. In the meantime I had jumped the gun and already had some stationery and business cards printed up with the caption of “Klassen Importing Co.” These I had printed by the local Centerville newspaperman, who, sensing a story, came over to interview me.
For a while I dallied. Then the urge to be a bonafide inventor and the hopes of becoming a multi-millionaire business tycoon prevailed. I made a resolute decision: come hell or high water, I would put the Canolectric on the market. This required a lot of doing. So to get started. On September 16, 1955 I incorporated Klassen Enterprises, Inc., under the corporation laws of the State of California. The corporation was authorized to issue 500,000 shares of stock, with a par value of $1.00 per share. My attorney was Gene Rhodes, a personable young fellow my age who also lived in Glenmore Gardens. The incorporating directors were Wm. E. Adcook, who had a hardware wholesale business; Albert J. Miller, of San Jose, who owned Milco, Inc., engaged in the manufacture of the previously mentioned Lanoglove hand lotion;
Gene Rhodes; my wife Henrie Etta, and myself, as president.
My neighbor next door, John Beumer, was an engineer for an electronics company by the name of Ampex in Redwood City, across the bay. Across the street from him was a young engineer and draftsman by the name of Charles Wilson, who worked for John. I showed them both my working model and they were very much impressed. I persuaded the young draftsman to make up a set of engineering drawings that could be translated into production blueprints. This was in October of 1955. Over a period of a few months he completed these drawings. In the meantime, I designed an attractive housing and had a plastics craftsman by the name of Chapman (company name: Chapman Plastics, Berkeley, California) construct a white plastic cover for the unit.
Next I had a machine shop, Engineered Instruments of Hayward, try to make a model according to the blueprints. After spending several weeks and $400.00, they were not doing a good job and I cancelled their contract. I found a machine shop outfit by the name of Frisch & Herzberg in San Leandro who were more capable. They did a good job in making a model that could be a prototype and could be used for demonstration purposes. (Feb., 1956.) Now that I had a working demonstration model to show, we went over to Hunt’s Ketchup plant in Hayward and obtained a carload of new unused tin cans to open, and we were in business. I realized that it would take money, a lot more than I had, to put the product on the market, and that I would need investors from the public. One positive benefit that accrued from my previous boondoggle investment with the Commercial Tobacco Co. was that I learned something about corporate structure that I had not known before. I learned that the initial promoter could make a public stock offering and at the same time retain an equal number of promotional shares for himself, thereby still keep control of the company he founded. At our Director’s Meeting on March 5, 1956, we authorized our attorney, Gene Rhodes, to apply for a permit
authorizing our corporation to issue and sell 100,000 shares at $1 par value per share. This application was made to the California Corporations Commission, and limited our stock sales exclusively to residents of California only. By March 20, the desired permit was granted.
On March 26, 1956, I filed an application with the United States Patent Office for a patent on my “Electrically Operated Can Opener.” Handling this application for me were a couple of Jewish attorneys in Oakland by the name of Gardner and Zimmerman. We were asking for 19 separate claims in our application. It would be another 13 months before we were to receive a favorable response to that application, April 23, 1957, to be exact.
At the beginning of April I leased a one room office at 1079 “B” Street, Suite 222, in downtown Hayward and found myself a “sales manager” by the name of Al Bierman. Al had been sales manager for Al Miller of the aforementioned Lanoglove company (Milco, Inc.) which was now hurting badly for cash. At the April board meeting the directors voted both myself and Al Bierman a salary of $500 a month. We were now ready to demonstrate our “baby” and sell securities to the public.
So now I was in business. I had an attractive product to show and demonstrate. We had a patent application in the mill to protect our invention. We now had an office to work from, a permit to sell stock, and a vocal sales manager to help sell that stock. At about this time I also acquired a most efficient secretary and bookkeeper. In preparing some of our previous literature for promoting the Canolectric and also the stock sales, we employed a local printer who had a shop in Castro Valley. His name was Sam Totaro. He did $500.00 worth of printing for us and decided to take payment in 500 shares of Klassen Enterprises, Inc. stock. While we were over at his house to present the stock offering circular, his wife, Louise, and her mother were also present. She seemed hostile to the idea of buying the stock and was forthright in saying so. However, Sam went ahead anyway, and used to drop in at our office just about every other day. We told him we were looking for a good secretary, and he told us that his wife Louise was looking for just such a job. I called her up and asked her to stop in for an interview. When she did, I was duly impressed and hired her on the spot. She proved to be one of the most intelligent, loyal and efficient secretaries I have ever had the good fortune of hiring. Soon after she began working she too was highly impressed with the merits of Canolectric and soon bought an extra 50 shares on her own account. One day Al and I were sitting at our desks in our Hayward office when in walked a young man by the name of Cecil W. Boswell. He had heard of our electric can opener, and now that he saw it with his own eyes he was grinning from ear to ear. He, too, had been thinking about the need for an electric can opener, he said. When he saw our demonstrator neatly cut open a number of cans we had on hand for that purpose, he became even more excited. Cecil was from San Francisco, where he had an office at 1139 Mission St. He was sales representative for Robbins & Myers, whose H.Q. were in Springfield, Ohio. When Cecil Boswell walked out of our office he was an enthusiastic promoter of Canolectric, and he was just dying to tell the rest of the Robbins & Myers sales staff in Springfield of his newly found gem. This he did with gusto at their next regularly scheduled sales meeting.
The next thing I knew I got a telephone call from Springfield, Ohio. It was an invitation to demonstrate our appliance to the management, all our traveling expenses paid. This I did, taking Al Bierman along with me. The top officials were impressed. Unfortunately, the president of Robbins & Myers, namely, Albert W. McGregor, was out of town. A week or so later I was asked to come back and demonstrate our Canolectric again, in front of the president. This I did and he also seemed to be favorably impressed that our invention was a winner. The follow-up was that Robbins & Myers made us an offer under the terms of which, if they could have an exclusive contract to manufacture our can opener, they agreed to advance approximately $50,000.00 in tooling costs, which costs were to be repaid at the rate of $1.00 per unit upon the first 50,000 units manufactured.
Robbins & Myers would also do the advance engineering on the unit. There was one tough stipulation, though. Robbins & Myers wanted an equivalent amount of collateral to make sure that we would live up to our side of the bargain. This I met by pledging the remainder of my notes of the Silver Springs land deal, the balance of which at this time still amounted to roughly $115,000. The culmination of these negotiations was that on September 17, 1956, Klassen Enterprises, Inc., and Robbins & Myers signed a binding contract on the above terms. Robbins & Myers had previously bought up an old established firm by the name of Hunter Fan and Ventilating Company, who were located in Memphis, Tennessee. Our appliance was to be manufactured by Hunter, whose manager was Frank S. Brady, and whose chief engineer was a brittle, but brilliant, fellow by the name of Carl Buttner, who had immigrated from Germany back in 1928. From here on out most of my trips now were to meet with the Memphis people, to coordinate design, prices for manufacturing, packaging and other details. Most of the times when in Memphis I stayed either at the Peabody Hotel, or the King Cotton. Up to this time Al Bierman and I had been selling our stock directly to whomever we could, as rank amateurs. We had so far sold only about 19,000 shares. In the meantime I had been financing the company expenses strictly out of my own pocket, loaning the company a few thousand or so every month, since we were prohibited from using any of the stock proceeds unless and until we had sold a certain minimum amount, which as I recall, had to be 100,000 shares. Before that happened I had loaned the corporation a total of $25,500. Now that we had the Robbins & Myers contract in our pocket, it was a new ball game. With our improved prospects we now went to a brokerage house in Oakland to have the pros do the stock selling job for us.
We contacted Lester M. Grant, of Stephenson, Leydecker & Co. at 1404 Franklin St. in Oakland. Les Grant was an up and coming young man, in his early thirties, and was also vice-mayor of the City of Oakland. Although he was only a salesman in the firm, he nevertheless was one of their best and had a wide range of contacts. We demonstrated our Canolectric by setting it on his desk and opening several cans. He, too, was immediately fascinated. He took a few days to check us out, and personally called President McGregor of Robbins & Myers to confirm whether we really had a contract as we said we did. When he confirmed that we did indeed, Les came over to see us at our office. He said he had
talked it over with the head of his stock company and they were willing to sell our stock. We soon reached a written agreement and were off and running. Finally we were in the big leagues, I thought to myself. Already I could see millions dangling before my eyes.
In the meantime, we had managed to get quite a bit of good publicity in the major newspapers in and around the San Francisco area and the business community was beginning to take note that maybe we had a hot item on our hands. In August of 1956 I received a call from Forrest Tanser, one of the executives of the brokerage firm of Sutro & Co. He said he had a wealthy client who might be interested in buying my interest in Canolectric. We went over to his San Francisco office and demonstrated our prize baby to him and his elderly client, a Jew by the name of Adrian Falk. A few days later I received a call from Tanser, slating that his client was willing to buy my interest for $250,000 to be paid
$50,000 down and $50,000 a year over the next four years, and at the same time I was to stay with the company at a salary of $25,000 a year.
I considered the offer for a while and we discussed it at the next directors meeting on September 3. I finally called Forrest Tanser and told him I wasn’t selling, the offer just wasn’t good enough. He was mad, and hung up on me. At about this time I also received another offer from a San Jose real estate tycoon. He offered me $150,000 cash, no strings and no delay. I also considered that offer for a while, then turned it down. I felt I had a big thing, I was going to ride it all the way, and nobody was going to rob me of its ultimate benefits.
In October I made another trip to Memphis to further negotiate and finalize engineering, styling and production plans. During the same month I negotiated and signed a contract with Stephenson Leydecker in Oakland to sell the 80,000 remaining shares, allowing them a 15% commission. Gene Rhodes applied to the Corporation Commission for approval of this arrangement and it was granted. During the month of December we received an invitation from Robbins & Myers to display our demonstration model of the Canolectric in their booth at the Chicago Housewares Show in January, an offer we readily accepted. This show was an annual affair and was undoubtedly the largest in the country. It was staged on the Chicago Pier premises, a gigantic building complex and layout extending far into Lake Michigan.
Taking along our prized demonstrator model and an ample supply of tin cans, Al Bierman and I flew into Chicago, lodging at the Drake Hotel. Robbins & Myers had a large booth at which they displayed not only their own products, but also those of Hunter Fan and Ventilating Co. The major segment of their combined sales staff was also on hand and we got to know all of them quite intimately during the week of January 16 to 23, 1957. They were a good, congenial crew.
Our push-button electric can opener immediately attracted an unusual amount of attention, more so than all the myriad of products R & M and Hunter Fan had on display in their booth. This, of course, evoked some mixed feelings among their sales staff, who, although glad they had latched onto a hot item, nevertheless, they had their own interests to promote and their own wares to display. Al Bierman claimed we had the most sensational new product at the show, and whether true or not, we did attract a tremendous amount of attention. General Electric executives came to look it over, the president of Oster Mfg. Co. came by several times to take notes. Even the president of Sears, Roebuck, a fat little Jew by the name of General Woods asked me to demonstrate it for him, after which we got into a lively disputation, with him lecturing me as to what was wrong with it. Having an open little penknife in his fat little hand, he emphasized his last point by cutting a scratch on the metal plate of the flip-up lid of my can opener, an arrogant gesture that left me furious. I still have that demonstrator, scratch and all.
After the first two days, we called Les Grant back in Oakland and reported the enthusiastic reception we were getting from the trade, and sent him a telegram to that effect. When we got back to California, we found that that telegram had given the sales crew at Stephenson Leydecker a strong shot in the arm, and stock sales were booming. Our trip to Chicago had proved doubly beneficial – both to stock sales and responses from jobbers and dealers in the appliance field. In fact, we soon received a call from Sears, Roebuck saying that they were interested in discussing a major purchase contract.