Apple Computer Inc.'s iPad runs on touch-pad technology developed by a firm called Fingerworks at the University of Delaware, funded by Main Line investors, then spirited west to Apple's Cupertino, Calif., headquarters, in a quiet deal that left both sides happy, at the time.
That's according to Lennart Hagegard, the former ABB and Ikea executive who settled in Wayne in the mid-1990s, and backed a string of U.S. firms as a venture capitalist and "angel investor," with varying success.
Now retired to his native Sweden, Hagegard told me about his happy Fingerworks coup Tuesday, after his brief visit back to Philadelphia was extended by Iceland-volcano flight delays.
Hagegard credited two professors, John Elias, who taught electrical engineering, and his student, Wayne Westerman, the founders of Fingerworks.
Hagegard was attracted by their mix of hardware and software, and the skilled craftsmanship in the maze of small circuits and switches melted into plastic that Elias and Westerman were preparing to commercialize through a line of keyless, highly touch-sensitive keyboards. At first, the professors marketed to people with hand injuries, so they could compute more easily.
After Fingerworks hired salesmen and managers, Hagegard invested in September 2004, with a handful of others, raising a total of less than $1 million. "A month later, we got the first offer from Apple," for around $5 million. They held out, and began talks with Japanese manufacturers.
"Five months later, Apple tripled its offer, to around $14 million," Hagegard said. "We couldn't say no anymore," he added. "I got about seven-and-a-half times my money back, in less than half-a-year."
Westerman joined Apple. Elias stayed at the university. Apple, famously reticent about product development, didn't return my calls seeking comment.
"This is one example of technology made here in the Philadelphia area that's changed all our lives," said Vincent Schiavone. "I just wished more of it would stay here, and create jobs." Schiavone is currently managing partner of Fort Washington-based social-data miner ListenLogic. Schiavone first told me about Fingerworks and Hagegard, whom he calls "the dean of angel investing in Philadelphia."
Hagegard isn't done with touch technology. "One of the few weaknesses I know for Apple's Fingerworks technology - it is very temperature-sensitive," he told me. "When it's very cold outside in Sweden, you have to really warm your fingers."
But Hagegard says he's found a little Scandinavian firm developing a cold-resistant touch pad. "I'm going to take a closer look when I get back there," he said.
Bankers vs. politicians
Philadelphia Federal Reserve Bank president Charles I. Plosser is defending Fed powers against the Senate Democrats and their bank-reform bill.
In a letter to local congressmen, Plosser says the bill would trim the independence of the banker-oriented Fed. Instead, it would empower political appointees, who Plosser fears are prone to dangerous short-term actions that end up hurting the economy.
Plosser questions the bill's reliance on "policymakers' discretion" and the Federal Deposit Insurance Corp., instead of bankruptcy courts, to take apart troubled banks. He opposes its proposal to limit the Fed to regulating the 35 biggest banks, which he fears would be labeled "bailout bait" and "too big to fail."
He warned the bill would "politicize" the Fed by making the key New York Federal Reserve presidency (Treasury Secretary Tim Geithner's old job) a political appointment, taking the power away from the New York Fed board of bankers and businesspeople. "Political influence over monetary policy is dangerous," he said.
Plosser admits the Fed needs change. He wants it to stop making bailout loans or investing in home-loan bonds; to start pushing banks to boost their capital with convertible debt, and to compile a twice-yearly "Financial Stability Report to Congress."
But don't shorten the Fed's leash, Plosser warns, or it risks ending up like the two failed central banks of the early republic, whose stone carcasses litter the neighborhood of Independence Hall. "Both failed because they became embroiled in politics," Plosser said.