On the occasion of the 40th anniversary of the Van den Kroonenberg Award for successful young entrepreneurship, we spoke extensively with former winners. This episode features Alex Pelsmaeker, founder of Omikron. He won the first Van den Kroonenberg Award (in the time known as the UT Entrepreneurship Award) in 1984.
Interview by Maurice Essers
Text by Lidewey van Noord
Eavesdropping equipment in a cigarette box
According to Alex Pelsmaeker, it was simply logical that he went to study at the UT, which at that time was still the ‘Technische Hogeschool Twente’ (THT: Polytechnic Institute Twente). He always liked electronics. In high school, Pelsmaeker had a special box from Philips with which you could make your own electronic equipment. During the same period, he founded a club at school so he could share his passion with friends. “During a working week, we put together a listening device, which we hid in a cigarette box. This way we could listen in on what our parents discussed among themselves.” But they didn't just focus on espionage, they also invented flashes for cameras, which they even sold. “That was completely new at that time, everyone still worked with flashlights.”
The teachers at school encouraged the club members. The club was given permission to use the craft room whenever they wanted. Pelsmaeker even received the key to the school, so that he could still enter it after school. “It was the seventies: freedom, happiness. Sometimes we rented movies and went to school to watch a movie in the evening. The police came by once because someone had reported that burglars were walking around the school. When I told them we had permission to be there after school, they didn't believe me at first.” Studying electrical engineering was simply the obvious choice after high school.
Matenweg 10
When Pelsmaeker arrived in Enschede in 1974, the THT was still a relatively new university. The fact that it was a campus university particularly appealed to him, which was the reason he did not choose Delft or Eindhoven. “The advantage was that you immediately had housing. Even at that time, it was a hassle to get a room as a student. I did find the interview process very nerve-wracking.”
Pelsmaeker is still in touch with his former housemates. “We've even been seeing each other more often lately. During the time when everyone was busy with their careers and young children, we lost touch with each other, but now everyone is retired and the children have left home, so it is great to visit each other more often and to look back on our study time together.”
The student house at Matenweg 10 had six rooms, but one of them was never rented. “It was too small and had too few windows. So we turned it into a bar.”
Computers and girls
Pelsmaeker enjoyed his electrical engineering studies, although it was different than he expected. “I thought we were really going to design, but the first years in particular consisted mainly of theory and mathematics. Electromagnetism, that kind of thing. I liked the practical side more.”
When he came into contact with computers, programming, and IT during his studies, he noticed that he found them the most interesting. At that time there was no separate computer science course, it was part of electrical engineering. “During the course of my studies, I increasingly looked in that direction and eventually got stuck in IT.”
Pelsmaeker took eight years to complete his studies, which at the time was five and a half years. Nowadays a long time, but in those years it was still very common. “We had a lot of fun. You had to obtain your propaedeutic certificate in your first year, otherwise you would not be allowed to continue with the rest of your education, but it actually didn't matter much after that. Of course you had to pass certain subjects, but in which year you did that exactly was up to you.”
Pelsmaeker graduated in biomedical engineering, a fairly new specialty at the time. “There was also clearly a practical side to this, of course, because of the patients.” Before his graduation internship, he worked for two years at the Diaconessen Hospital in Eindhoven, where he also stayed internally, in the nurse's home, where all the nurses lived. “At the THT I always sat among men. We really had problems finding women for the parties there, although girls from the area managed to find the THT. And now I lived for two years with almost only girls around me. That was a fun time.”
Pelsmaeker conducted research into muscular dystrophy at the Eindhoven hospital. They stimulated the muscles electronically, with needles, and watched how the muscle responded. The results were analyzed with software. In this way, they tried to discover whether it was possible to diagnose muscle loss early. “A very practical application, and we had to program to process the results. At that time you didn't have small computers yet; we had bigger systems, real bins. There was a huge drawer in there, and the disk was in there.” Laughing: “It contained no less than five megabytes. It's unbelievable how fast that development has gone in recent decades.”
The early years of Omikron
The UT Van den Kroonenberg Award was first awarded in 1984, and was then called the UT Entrepreneurship Award. That first award went to Pelsmaeker, for his entrepreneurship with his company Omikron. “That name dates back to the early years of my training. I then started building speaker systems as a hobby. Many students did that at that time. I still have them here in the living room.” Pelsmaeker was able to develop the speakers because he had access to the PDP-10 at the UT, a mainframe computer also known as DECsystem-10. “I was able to create the design through simulation. We built and sold quite a few copies during that time. The speakers are still very good, there are enthusiasts in the Netherlands who still use them.”
All speakers at that time had fairly short names. Pelsmaeker chose the Greek letter ‘omikron’ as the company name, which was not yet used and he thought the name suited the loudspeaker boxes. Although most of his fellow students went into business after graduation, it was obvious for Pelsmaeker to continue with his company. “I always liked making things.”
He soon sold the music box business and started working with his graduate professor Kasper Boon. Boon was an author of computer books and had ideas for new titles, but in order to develop them, he needed some more programming capacity. He approached Pelsmaeker for this. “To create those booklets, many small programs had to be created, in Basic, for the home computer market. In many cases it concerned practical matters, such as calculating the mortgage interest. But we also made games, including very fun adventure-like games, with a mystery that you had to solve. Boon wrote the texts and had all the ideas, I took care of the implementation and I hired students to write the programs.”
They published some of the booklets independently, there was even a publishing house Omikron for a while, but most of the books were published by Addison-Wesley, a major American publisher. “An international publishing house, so the books were translated into Spanish, English, German and French, and sold worldwide.”
Pelsmaeker found it very honorable that he received the UT Entrepreneurship Award as a successful young entrepreneur, but the award was also very important for his company in another way. At that time, the prize consisted of an amount of 10,000 guilders and the money enabled him to further professionalize Omikron. “I bought new computers from it. That was a worthwhile investment that we could put to good use.”
The fact that his company had won the UT Entrepreneurship Award was also a fact that Pelsmaeker sometimes mentioned in conversations with potential new clients. “If they wanted to know more about my background, I told them about the UT and that award. That may have sometimes helped to convince them.”
Own bus stop
In that first year, in which Omikron made the booklets with computer programs, the company immediately took off. “I never thought it would start with booklets, but what difference did it make? Once that period was over, I moved more towards real technology. I wanted to turn Omikron into a software engineering company. That's where my heart really lay, in technical automation.”
Pelsmaeker hired a number of people on a permanent basis. Omikron was first housed in the BTC, the business technology center, a building opposite the campus, which has recently been demolished. As a UT startup you could rent business premises cheaply. Later, as the company grew, Omikron moved into its own building, which was called the Holborn building. The building was built by Holborn, a company that manufactured futuristic-looking computers from 1979 to 1983. After Holborn went bankrupt, Omikron moved in. “There was a bus stop in front of the building, it was called Omikron. I really liked that we had our own stop. Unfortunately, years later it got canceled.”
After the flying start, Omikron faced a tough time. “Running a company is a matter of good entrepreneurship, but also of luck. You have to have good ideas, do good work, but without a dose of luck you won't make it. I was a technician, I found it very interesting to solve problems and create something beautiful, but I was less good at other facets of entrepreneurship, such as building a network and obtaining orders.”
Pelsmaeker tried to solve it by transferring those responsibilities to others. He brought in investors, who became co-owners and had a large network, and he hired someone to take care of the marketing. “But that didn't go very well. Maybe it was my mistake that I hired someone who didn't have that much experience and therefore didn't cost that much, but he wasn't able to win new business. And the investors' network also failed to deliver any orders. They had also misjudged it.”
A difficult time
A bit of luck could have saved Omikron, but that didn't happen either. Take the collaboration with Melkunie. Omikron helped the company automate work in their warehouses. Supermarkets ordered their products from Melkunie every day, but those orders were still manually taken from the shelves in the warehouse and placed on the carts that were rolled into the trucks. Melkunie had commissioned the mechanical engineering firm IPA to develop a mechanical system that took products off the shelves and placed them on the carts based on orders from supermarkets. The only human work that remained was to wheel those carts into the truck and out again at the supermarket.
IPA just didn't have an operating system for their mechanics yet. Omikron was called in to develop that. “It was a great assignment, because it was a big challenge to do that with the hardware that was available at the time. The installation worked well and Melkunie was very satisfied. IPA was commissioned to build a second installation, but instead of continuing the collaboration, IPA said: 'We now know how to do it, thank you for your great work, we are now going to do it ourselves with that control.' Then we were offside.”
Ultimately, this was detrimental to all parties. IPA was unable to manage the control and ultimately went bankrupt on the assignment. According to Pelsmaeker, the fact that Omikron won large orders that they worked on for months, sometimes even a year, was their pitfall. “We were a small company. If you are not careful, you will fall into a hole when such an assignment ends, because you do not have a new assignment yet.”
Another example of an assignment where things did not go according to plan was for the Centraal Boekhuis (CB), the large warehouse where all the book stocks in the Netherlands are stored. The CB wanted to automate the warehouse and commissioned three companies to develop a plan for this, including Omikron. When Omikron presented their plan, the CB was very enthusiastic. “They said, 'Yes, that's the way we should do it.' So we thought we had that job. But then they said: 'We actually think you are too small to implement it, so we will use your concept, but we will ask one of the other companies to develop it and realize it.' We missed another order.”
Fortunately, other customers treated Omikron nicely. A German distribution center that also wanted to automate its warehouse turned to Omikron for help. The company became very successful and grew from a business with a few dozen employees to a company with 800 employees. “And all these years, to this day, I have been working for that customer. You have to have such customers, you can rely on them.”
Bankruptcy and tax authorities
One good customer is not enough. Omikron was on the brink of bankruptcy. Pelsmaeker decided to intervene. “Nowadays it is a strategy to declare yourself bankrupt and get rid of your debt, but I didn't think that was nice, I wanted to prevent bankruptcy. So I had to significantly reduce the size of the business and fire people, which I found very annoying.”
Unfortunately, the fact that Pelsmaeker had done everything he could to prevent bankruptcy and to handle everything properly ultimately turned out to have negative consequences. Because he was not sure whether he would be able to pay his social security contributions in the coming month, he visited the Tax Authorities in the hope of making agreements and finding a solution. “The inspector said: 'It's great that you reported this, we will definitely figure this out.' I really had a good feeling when I went home. The next morning I arrived at the company and the same inspector was there with a bailiff. He had sealed the place and confiscated everything, including the products that still had to be shipped out. And to make matters worse, he doubled the assessment for the following month, because 'if you go bankrupt, we often only get half the money, so this way I still get my money'. So that is the Tax Authorities.”
Previously, Pelsmaeker could have laughed about a collision with the tax authorities. During the first inspection that Omikron received, the inspector went through the old declarations. “In one of the reports he said: 'I don't accept that, I think you spend too much on coffee.' I explained that we worked with students and had a lot of walk-ins, and that programmers simply drink a lot of coffee. But the inspector insisted that it was impossible for so much coffee to be consumed and did not want to accept the deduction.”
Ultimately, Pelsmaeker managed to pay his employees their last wages and Omikron was largely dismantled without bankruptcy. He also did not have to pay the double assessment - after he had incurred a lot of costs in filing an objection. But his confidence in the Tax Authorities has never been restored. “And then I was basically back to square one. I was just self-employed again.”
A self-employed person with debts, but his old professor Kasper Boon, who had since transferred from the UT to the Open University, offered him a job. Pelsmaeker worked permanently at the Open University for seven years as a course team leader, training students and taking exams. During those years he was able to pay off his debts. In the meantime, he continued to work as a self-employed person for his loyal customers.
Computer Solutions
When Pelsmaeker's children grew up, he decided to move to Groningen with the whole family. They bought a farm with a lot of land around it. Pelsmaeker had quit his job at the Open University and wanted to look for a new job in Groningen, but at that moment he was approached by a company from Breda, Computer Solutions, a company in technical automation. Exactly what Pelsmaeker was looking for and Computer Solutions wanted him so badly that they offered him a home in Breda, so that his family could stay in Groningen and he could be in Breda during the week.
For Computer Solutions, Pelsmaeker regularly traveled to Central Asia, to Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, Turkmenistan, Georgia and Latvia. They were fun, interesting projects, and sometimes very exciting because of the political situation in some of those countries. During the weekends he often did odd jobs on the farm in Groningen, an old building. “That was nice, to be busy with something other than computers. But looking back on it, it was also a sacrifice to be away so often for work and to be separated from my family during the week. I felt like I was living in two different worlds and I started to miss more and more things.”
Pelsmaeker became increasingly unhappy and finally decided to make a completely new start in 2006. He quit his job and started working as a self-employed person again. He received a nice assignment from his old employer Computer Solutions, for air traffic control at Schiphol. He also had the customer in Germany. After divorcing his wife, he moved from Breda to Amstelveen, to live closer to Schiphol.
Schiphol
At Schiphol, Pelsmaeker worked as a self-employed person on the air traffic system, with a team of twelve programmers within which things were not going well. Several managers were unable to get the team on track, and Pelsmaeker decided to take the plunge and offer his services. “I said that I wanted to try to reorganize the business, but according to the management that was not possible at all, because the whole of Schiphol ran on that important software, so that team could not be run by an external party. I understood that, but when no one else wanted to do the job, they made me team leader anyway.”
Pelsmaeker reorganized the team and that turned out well. But then the financial crisis came and all self-employed people had to leave. “They kept me as long as possible, but in the end I was fired too. I was thrown back on my own, no work, no family. Ultimately I decided to renovate my house in Amstelveen.”
Pelsmaeker is still in touch with his roommates and fellow students from his student days. “A few years ago, after the alumni day at the UT, we went to have a look at Matenweg 10. A lot had changed there.” His eldest son, whom he taught to program, is now obtaining his PhD in Delft in the field of IT. “What he is doing there is beyond me, it is very complicated. Now he teaches me how to do it.” His other son is an archaeologist and makes archaeologically sound exhibitions for museums and his daughter is also very creative, she went to art school.
Omikron software engineering exists to this day. Pelsmaeker has continued to work for the customer in Germany and sometimes does other jobs, even though he is officially retired. He hopes to continue working for a long time, because solving problems with a creative idea is still what he enjoys the most.