Milking it

John DeMont

Globe and Mail Update

The 15 members of the Inventors Society of Nova Scotia trail along behind Michael Duck as he leads them across the shop floor of his gleaming factory in Sackville, Nova Scotia, where machinists build circuit boards and run punch presses the size of Volkswagen Beetles. Then it's on to the production line, where 90 workers assemble the components of the SureShot Dispensing System—the invention that made Duck one of the most famous entrepreneurs in the province. After that, Duck herds the group into the plant's custom movie theatre, to show off some of the new products his company, A.C. Dispensing Equipment Inc., is working on—including a new, improved version of a machine that dispenses flavoured shots like hazelnut and French vanilla for the Starbucks crowd.

"How do you get people to listen to your ideas?" asks one aspiring inventor.

"How do we get the right people to believe in us?" asks another.

Duck happily answers every question: Provide a great product in a market where an opportunity beckons. Look after your customers. Make every transaction a win-win situation for both seller and buyer. Be honest.

The aspiring inventors—among them a welder, a couple of office workers, a professor and a machinist—are a little star-struck. Twenty years ago, Duck was one of them. By day, he worked in maintenance at the local dairy; at night, he parked himself at the kitchen table to tinker with version 1.0 of the SureShot. The idea had come to him one morning as he stood in line at Tim Hortons, waiting for his large coffee. Every day, it was the same thing—either he ended up with too much cream or too little. What the place needed, Duck thought, was a machine that would spit out precisely the same amount of milk or cream every time.

A simple enough idea—but the best inventions always are. Today, A.C. Dispensing, the company Duck created in 1985, generates annual revenue of $24 million. Though Duck steadfastly refuses to talk about his clients, other than Tim Hortons, his SureShot system has reportedly been installed at Starbucks, Dunkin' Donuts and Krispy Kreme outlets. (The company also makes a version for doling out oil, which has been bought by Pizza Hut and other chains.)

Duck, a fit-looking 50, relishes his role as big shot. A massive gold ring adorns his left hand. In the parking lot outside sits a BMW X5 SUV; he's got a Shelby Cobra and a Maserati Spyder (each of which cost him more than the average Sackville house) in his garage at home. He's got a vacation property in Florida, plus a condo at Nova Scotia's exclusive Fox Harb'r Golf Resort, owned by his buddy Ron Joyce, co-founder of Tim Hortons. In A.C. Dispensing's boardroom—one of the stops on the tour—is the huge cherrywood table where the world leaders sat during the 1995 G7 Economic Summit in Halifax; Duck bought it at an auction five years ago. "It was a neat piece of history and a cool-looking table," says Duck. "And it's round, so everything is neutral—there's no obvious person in charge. I mean, someone's always in charge, but there's no need to flaunt it."

Duck's an ideas guy, a salesman, fond of saying things like, "Free your mind and your ass will follow" and "Find your big, hairy, audacious goal." When he really gets going, he sounds like a revivalist preacher. In other words, he's a typical rags-to-riches entrepreneur. And like many entrepreneurs, he's great at motivating the troops and talking up his product, but not so great at the daily management and long-term planning that can turn a small outfit into a huge one. The difference between Duck and the next guy is that he recognized it early enough to ensure his company will survive long after he's retired to the sunny South.

Duck loves to talk—and when the subject is himself, well, all the better. Over the years, he's told his Horatio Alger tale to MBA students, kids, executives, aspiring inventors and anyone else who asks.

Duck grew up in Neptune, on the New Jersey coast, in the 1960s, when race riots rocked his working-class neighbourhood and even his school. In 1973, when Duck was 16, his father, James, looking for a fresh start, moved the family to Halifax and started his own heating and oil-burner repair service. Duck wasn't cut out for the classroom, and soon after moving to Canada, he dropped out of school and took a job as a stevedore on the Halifax docks. Three years and a few jobs later, he landed at the dairy. It was there that Duck discovered what he calls his "freaky quality"—an aptitude for mechanics that allowed him to become the plant's head maintenance engineer within 18 months, with zero training. "I was always making things," he says, "always picking up a screwdriver and doing something. I just needed a chance to show people what I could do."

To make extra money, Duck started recovering empty 45-gallon drums—and later, old fruit juice containers—at the dairy, then reselling them for a profit to industrial users throughout the Maritimes. Then, in 1985, came the coffee-cream epiphany. It took him six months to develop a rough prototype. "I used a small timer and a wire frame I built to hold a 20-litre milk carton," says Duck. His sales manager at the dairy suggested he call on Tom Cahill, who owned the busiest Tim Hortons franchise in the country at the time, at the corner of Young and Robie Streets in Halifax.

Duck made Cahill an offer: Use the dispenser for a few months, free of charge; if you don't like it, no problem. Cahill ended up buying the machine for $3,800. Three months later, he bought another—a new, improved version Duck created by automating a small refrigerator. Then Cahill told Duck he was having trouble getting the right amount of oil into pans at his Pizza Hut franchise. Within nine months, Duck had adapted his milk dispenser for oil. "Mike loves to have a problem and then to find a way to solve it," says Cahill, who now uses SureShot dispensers in the 10 Halifax-area Tim Hortons he owns. "That's the key to his success."

Consider what happened a year later, when Duck took his machine to a meeting of Tim Hortons franchisees in Truro, Nova Scotia: "Too damn high," Ron Joyce said perfunctorily when he eyeballed the dispenser. Crestfallen, Duck went back to the drawing board, changing the dimensions of the SureShot so it would fit behind the counter at any Tim's outlet. Sales throughout the Maritimes picked up, and Duck shovelled every cent he made back into the business.

Yet he was reluctant to quit his day job. He ran his entire operation—manufacturing, sales, marketing—out of the basement of his Cape Cod-style house in Sackville, all the while working 60 to 80 hours a week at the dairy and hawking drums on the weekend, not to mention spending time with his wife and two kids (A.C. is named after his son Ashley and daughter Courtney). "What you have to know about true entrepreneurs is that the temptation to quit is there every day," says Colin MacDonald, the CEO of Halifax-based lobster giant Clearwater Seafoods, who first heard about Duck's plans to build his dispensing-machine empire while the pair worked out side by side at the gym. "People like Mike succeed because they just have this burning desire to get something done, no matter what's in their way."

For five years, until 1990, Duck kept up his killer schedule. But at last, with $400,000 a year in sales, he quit his job at the dairy and hired his first full-time employee—Avery Wilson, a friend and machinist with Canadian National Railway—to focus on the fabrication. Duck's big break came in 1995, when he got a call from Tim Hortons' operations director in Toronto: The chain wanted to put Duck's machines into all of its Ontario franchises. Within a couple of years, sales had topped $1 million, and Duck had 11 workers and 30 tonnes of manufacturing equipment crammed into his basement. It wasn't until then that he felt confident enough to move A.C. Dispensing into its own building—an old roller rink a few kilometres away. Soon the company had outgrown that facility, so Duck spent $4.2 million building the sparkling, state-of-the-art, 65,000-square-foot factory, on an eight-acre property, that he's giddily showing off to the members of the inventors' society.

Duck ran his company with an entrepreneur's élan, focusing on sales and profits while forgoing the boring stuff, like long-term planning and finance. That was fine in the early days, when A.C. was building market share in its small niche. Now, however, Duck's company has customers all over the continent, and the fast-food sector is nearly saturated, leaving little room for growth in dispensing equipment. "A lot of entrepreneurial companies never change," says Duck. "The founder just runs things the way he always ran them. That limits the possibilities. We wanted to ensure that didn't happen here."

Duck knew early on that management was not his forte. "My energies are better spent looking at the overall strategy, keeping people excited, coming up with new ideas," says Duck. "I wasn't the guy with the best skill-set to ensure the company continued to grow." In 1997, he'd hired Garth Illsley as the company's general manager, in charge of day-to-day operations at the plant. But if the company were going to thrive, it needed someone who could think long-term. "As the company started to grow and we continued to put more people in place," says Duck, "I told my general manager, 'Hire me someone who can run my company one day.' You always have to be able to replace yourself with somebody better than you—and there's always somebody better than you."

That somebody was senior VP David Mac-Aulay, a chartered accountant by trade who took on the role of president (Duck hung on to the CEO title). MacAulay's marching orders: first, to foster greater cross-functional ability by tearing down the "silos" within the company; second, to place more emphasis on understanding A.C.'s target customer; and finally, to push sales over $50 million a year by 2012. The latter will be a challenge. Because of the long sales cycle for SureShot equipment, growth comes from new rather than repeat business. Earlier this year, the company temporarily laid off 25 of its 125 employees because a major client didn't follow through with an expected expansion. (Most of the workers have since been rehired.)

With MacAulay in charge of day-to-day operations, Duck spends more than half the year on the road, schmoozing big clients and hawking his SureShot system (as well as checking out the competition) at trade shows across North America. When he's in Nova Scotia, he spends most of his time in A.C. Dispensing's freshly created research and development department. In 2006, A.C. spent $4.2 million tweaking existing products and coming up with new ones (like that disposable-cartridge flavoured-shot dispenser, which the company is already selling to coffee shops and convenience stores around the continent). Instead of trying to wring more profit out of existing product lines, Duck and MacAulay are allocating more time and resources to ensuring they're in the right markets with the right products. "For now, we're focusing on the food and beverage industry," says MacAulay. "But it's an approach that could take us anywhere." Already, A.C. Dispensing is talking to potential partners in Europe about trying to break into the old-country coffee industry.

R&D is where Duck thrives. "We work as a team," he says. "It's not about what I say we should do; it's about what the team says we should do. It's a whole different approach from most entrepreneurs—and it's known throughout the company. It's part of our strategic plan."
When Duck manages to score some free time, he's inevitably lured into his basement workshop. "I'm working on a couple of projects," he says, though he's reluctant to give any details. "I'm always looking for the next big thing."

So are the members of the Inventors Society of Nova Scotia. Duck has them hanging on his every word, and the tour runs overtime. "Being an inventor is a lonely existence," says Daryl Lingley, the society's president. "There are very few successes. Sometimes it's good for our people to know that they're not alone in their endeavours."

"He's an inspiration to us all," adds John Whidden, a landscaper and surveyor from nearby Middle Musquodoboit who has spent five years developing and trying to sell his invention: a levelling device that eliminates the need to hand-rake ground after it's been excavated. So far, no one's bit, and Whidden admits that sometimes he gets discouraged. But not tonight—not after hearing Duck's story. Not when he's seen that one smart idea, and some determination, can actually pay off.

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