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FlowSense founder finds focus
March 2005. Larry Werner, Star Tribune

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Entrepreneur Paul Smallwood is building his Maple Grove business by focusing on biometrics, such as this iris-scanning security system to control access to building or equipment.

THE CHALLENGE: Develop a strategic focus for a one-man engineering firm.

Paul Smallwood prefers to think of himself as a "multi-tasker" rather than a hyperactive marketer who is constantly changing direction. But in the small Maple Grove headquarters of Flowsense, where Smallwood sells everything from fluid-handling valves to carbon-dioxide detectors, the engineer-turned-entrepreneur concedes that he is trying to develop a tighter focus.

His latest preoccupation is to record his first $1 million sales year by convincing facilities managers to control building access through equipment that checks identities by scanning people's eyes.

He was in Washington, D.C., last week training personnel at the National Defense University, part of the Department of Defense, to use the iris-scanning devices he's sold them.

Biometrics, he said, is the future of security technology, and he expects it to provide 60 percent of his company's revenue in 2005. Biometrics, which is the application of mathematical methods to solving biology problems, has become known in recent years as the use of biological traits, such as the characteristics of the retina, the face or fingerprints, to identify people. Smallwood has bet the rest of his career on iris scanning.

The road he's taken to this strategy is long and winding.

It began in Vietnam, where he was born and lived until the age of 14. His mother married a military man, who moved the family to Florida and adopted Paul.

"That's how I took the name Smallwood," he said.

After graduating from high school, he joined the Air Force and, after discharge, got a degree in engineering at the University of Illinois, where he met his wife, a native of the Philippines. They settled in Maryland, where Smallwood took a job working for Westinghouse, doing design work on the Seawolf submarine. Then he worked on power-generation systems for Westinghouse, selling them throughout Asia, until his wife convinced him to move from Florida to Minnesota to be closer to her family, which had moved from the Philippines to Winnipeg.

In the Twin Cities, Smallwood worked in marketing for McQuay International, which makes heating and air-conditioning systems. Then he was hired away by Honeywell, which he left when the Minneapolis company merged with AlliedSignal. In 2001, he was laid off by Burkert, a large German company that made valves and metering devices for industrial facilities.

That's when Smallwood decided he wasn't made for the ups, downs and rigidity of the corporate world.

So he started the home-based company he named Flowsense, even though it might have made more sense to get another salaried job to support his wife, three kids, a mortgage and other large debts.

"I have a very understanding wife," he said. "Actually, I've been an entrepreneur all my life. My mind has always operated as an entrepreneur. I have always marched to my own tune. Corporations depress your creativity. Corporate is such a big ship, and you can't always steer it in the direction that can help the company because you've got so many people protective of their turf. You don't know who your friends are. It's almost like politics."

He could steer Flowsense quickly in different directions, and he did.

That first year, he had revenue of about $50,000 selling Burkert valves for the distributors to whom he used to sell the valves before he lost his job. In 2002, he increased revenue to $150,000 by adding electrical and mechanical contracting to his business plan.

Finding himself chasing revenue from a variety of sources, from general contracting to consulting to brokering, he took 2003 to develop a focus, which he now says is three-pronged: selling environmental systems, industrial controls and security technology. It's that last category that got his entrepreneurial juices flowing. Everywhere he looks, he sees opportunities for the use of biometrics in building security. For example, he was invited to attend a defense-industry roundtable chaired by Gov. Tim Pawlenty recently.

"With Governor Pawlenty at the head table, there were executives from Lockheed Martin, from Honeywell, from Alliant Tech, from Goodrich Aerospace -- all these executives," Smallwood recalled. "As I was sitting there, I noticed if I was a terrorist, I could go into the mechanical room and I could deploy biological agents, and everybody in the room would be dead."

But not if access to the mechanical room were controlled by biometric security systems.

One of his products is software that stores the fingerprints, facial characteristics and the iris configuration of individuals. Either a handheld scanner or one mounted next to the door to a room can examine the iris of anyone trying to enter. If the individual's iris is "enrolled" in the system, the door will open. If not, it won't.

"Somebody can take a security card and they can use that card," he said. "But everyone has a unique iris pattern, and you come up and you can stand arm's length, and it opens the door electronically. What we do is we develop software to take all the information and put it into a data base so the next time you want to access a particular sensitive file or a facility or a room, you have to go through this process."

He's sold two contracts to the federal government in the past month and predicted that 60 percent of his sales will come from his biometric business in 2005. He's projecting sales of $1 million.

Smallwood said it's not too much of a stretch to move into personal security from environmental security. After all, keeping biological agents out of heating and air conditioning is "protecting the environment."

"Facilities managers have to start thinking that way," he said.

Last month, he moved from his home office to a rented office in Maple Grove and plans to hire a few employees to help him build Flowsense's business of offering environmental and security solutions to building managers. The company name, he said, might not fit quite as well as it did when he started selling equipment related to the flow of air and fluids.

"It's more like the ebb and flow of life, from environmental to security to industrial," he said, with a smile.

Whatever the name, he's on plan to fulfill a personal mission statement he put on his wall while still working for McQuay in 1996: "I am an entrepreneur with high ambitions. My next goal in life is to increase the family financial assets to $1 million by my 45th birthday, June 10, 2005."

With only about three months to go, "I think we're going to make it," Smallwood said.

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